Consumers Expect Inflation to Sit Still and the Labour Market to Get Worse. One of Those Readings Is the Highest Since April 2020.

The New York Federal Reserve released its August 2026 Survey of Consumer Expectations on September 8. The inflation half of the survey barely moved. The labour market half did, and not in a direction the Committee will find comfortable.

Inflation expectations went nowhere

• One-year-ahead median inflation expectations: 3.6%, unchanged.
• Three-year-ahead: 3.2%, down 0.1 percentage point.
• Five-year-ahead: 3.0%, unchanged.

Two months earlier the same survey had recorded a one-year figure of 3.7%, described at the time as the highest since September 2023, and a three-year figure of 3.3%, the highest since June 2022. August's readings are marginally below those, and the five-year expectation has now sat at 3.0% across both releases. On the survey's own evidence, the run-up in expectations through the middle of the year has stopped without reversing.

The labour market question is where the movement is

The survey asks respondents for the probability that the U.S. unemployment rate will be higher one year from now. The mean answer in August was 44.4%, up 1.6 percentage points on the month and the highest reading since April 2020.

That headline sits oddly with what the same respondents said about their own jobs, and the gap is the interesting part of this release.

• Mean perceived probability of losing one's job in the next 12 months: 13.8%, down 0.4 percentage point.
• Mean perceived probability of finding a job if the current one were lost: 45.4%, down 0.8 percentage point.
• Mean probability of voluntarily leaving a job: 19.5%, up 0.9 percentage point.
• One-year-ahead median expected earnings growth: 2.9%, up 0.1 percentage point.

Read together, respondents are slightly less worried about being fired and slightly less confident about being rehired. The June release recorded a job-loss probability of 14.1% and a job-finding probability of 44.9%. What has deteriorated most is not the perceived risk of losing work but the perceived difficulty of replacing it, alongside a much darker view of the aggregate unemployment rate than of one's own position.

Household finances

Median expected household income growth was unchanged at 3.0%. Median expected household spending growth rose 0.3 percentage point to 5.2%. The survey does not reconcile those two, and the gap between expected spending growth and expected income growth is one of the more durable oddities in the series.

The credit readings moved in one direction. The mean perceived probability of missing a minimum debt payment over the next three months rose 1.2 percentage points to 13.2%. In June the same measure stood at 10.8%, described in that release as the lowest reading since April 2023. Perceptions of credit access also deteriorated, with more households than a year ago saying it is harder to get credit.

How to read the series

The Survey of Consumer Expectations has been fielded monthly since 2013 and is built on a rotating panel of households, with a core monthly survey supplemented by modules on special topics. Inflation and income figures are reported as medians; probability questions such as the unemployment and delinquency measures are reported as means, which is why a single alarmed group of respondents can move those readings more than it moves the medians. Month-to-month changes of a tenth of a point are noise. The 1.6-point move in unemployment expectations and the 1.2-point move in expected missed payments are larger than that.

This article reports survey data and does not offer a view on interest rates or on any investment.