A report from the Federal Reserve Bank of New York shows that American households are not bracing for a surge in inflation—instead, they’re growing more concerned about income, employment, and their financial outlook. The findings may bolster calls from President Trump and others for the Fed to begin cutting interest rates.
According to the New York Fed’s April Survey of Consumer Expectations, short-term inflation expectations remained steady at 3.6 percent, while five-year expectations edged down to 2.7 percent. Although medium-term inflation expectations ticked up slightly to 3.2 percent—the highest since mid-2022—the overall picture does not reflect widespread inflation anxiety.
What is rising instead is economic pessimism.
Expected income growth fell to 2.6 percent, a three-year low. Wage growth expectations dropped to 2.5 percent. And the average perceived probability of losing a job or struggling to find a new one reached its highest level since April 2020. Nearly 14 percent of households now believe they could miss a debt payment in the next three months.
Consumers also anticipate sharper price increases in rent, gasoline, and college tuition—areas less responsive to monetary policy—while expectations for broader inflation remain anchored.
The survey’s results come as the Federal Reserve continues to hold interest rates steady, citing concerns that inflation remains too high. But softening consumer sentiment and falling income expectations could provide ammunition for those urging a policy shift.
President Trump has repeatedly pressed the Fed to cut rates, arguing that high borrowing costs are holding back American households and businesses. This latest data may give new weight to that argument—especially if inflation expectations remain contained and labor market fears grow.
The Fed’s next rate decision is due in June.
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