Consumer Expectations Show Slight Decrease in Short-Term Inflation, Mixed Labor Market Outlook

The Federal Reserve Bank of New York's Center for Microeconomic Data released its Survey of Consumer Expectations for July 2026, revealing a slight decrease in short-term inflation expectations. The median expectation for one-year-ahead inflation dropped by 0.1 percentage point to 3.6%, while the three-year and five-year horizons remained unchanged at 3.3% and 3.0%, respectively.

Gas price growth expectations partially rebounded after a sharp decline in June, increasing by 1.4 percentage points to 2.9%. In contrast, median year-ahead expected price changes decreased for the cost of medical care by 0.5 percentage point to 8.9% and rent by 2.4 percentage points to 5.9%.

The labor market saw mixed expectations, with mean unemployment expectations increasing by 1.1 percentage points to 42.8%. However, the mean perceived probability of finding a job if one's current job was lost increased by 1.3 percentage points to 46.2%, particularly among those with at most a high school degree and annual household incomes under $50,000.

The survey also reported improved expectations for future credit availability and decreased perceptions of credit access compared to a year ago. The average perceived probability of missing a minimum debt payment over the next three months increased by 1.2 percentage points to 12.0%.