Long-Term Inflation Expectations Rise

In January 2025, the Federal Reserve Bank of New York released its Survey of Consumer Expectations, highlighting a notable increase in five-year-ahead inflation expectations by 0.3 percentage points, reaching 3%. This adjustment comes as one- and three-year-ahead inflation expectations remained steady at the same rate.

Household Spending Growth Expectations Decline

The survey also revealed a decrease in the median household spending growth expectations by 0.4 percentage points to 4.4%, marking the lowest point since January 2021. This decline reflects a cautious outlook among consumers regarding their financial situations.

Deteriorating Financial Perceptions

Further insights from the survey indicate a deterioration in perceptions about households' current financial situations compared to the previous year. An increased net share of households reported a worse financial situation, with similar trends observed in year-ahead expectations about households' financial conditions.