By Matt Grossman
The share of Americans who expect better finances in the next year fell back to a recent low, according to a monthly survey by the New York Fed, another sign of gloomy consumer sentiment amid an uncertain economic outlook.
In November, 26.4% of consumers said they expect their financial situation to be "somewhat better off" or "much better off" in a year, down from 27.5% a month earlier. That matches a recent low from May, just after President Trump initially rolled out steep new tariffs, the lowest level that metric has otherwise hit since 2023.
The dim consumer outlook shows why the Federal Reserve's attention has increasingly shifted to arresting economic weakness, at the expense of a firmer stand against inflation. In November, consumers told the New York Fed they expect 3.2% inflation over the next year, and 3% inflation over the next three and five years. Those figures were flat from a month earlier.
Subdued expectations for further price increases could bolster the Federal Reserve's confidence that its long-running efforts to tame inflation are on the right track. When inflation expectations rise, some central bankers worry those forecasts could become a self-fulfilling prophecy.
Last week, the Commerce Department said that in the 12 months through September, the Fed's preferred price index rose by 2.8%, slightly higher than in August and above the 2% level that the Fed targets. Government statistics agencies are still catching up on publishing stats that were delayed by the government shutdown this autumn.
Meanwhile, unemployment has edged higher to 4.4% in September, versus 4.1% at the end of last year.
The November New York Fed survey did find consumers in slightly better spirits about the labor market, with a lower perceived probability that unemployment will rise further and greater perceived ease of finding a new job, if necessary. Workers reported a lower propensity to leave their current job over the next 12 months, however: On average, they saw an 18% probability that they would quit, the lowest reading since February and a sign that people perceive a limited set of job prospects.
Investors largely expect the Fed to cut interest rates by a quarter percentage point at a third consecutive meeting this week, as officials rebalance their anti-inflation efforts against a cooling labor market.
Write to Matt Grossman at matt.grossman@wsj.com
(END) Dow Jones Newswires
12-08-25 1114ET
