Inflation Expectations Rise slightly among U.S. consumers, but confidence in the labor market continues to strengthen, according to the latest Survey of Consumer Expectations released by the Federal Reserve Bank of New York. The June report found Americans expect inflation to increase over the next year, while becoming more optimistic about their job prospects.
Consumers now expect inflation to reach 3.7% over the next 12 months, up slightly from the previous month and the highest one-year inflation expectation recorded since September 2023. Despite the increase, expectations for gasoline price growth declined to their lowest level since August 2022, suggesting consumers anticipate some relief at the pump even as overall prices remain elevated.
The survey also found medium-term inflation expectations rose by 0.2 percentage points, while long-term expectations remained unchanged. Economists often view stable long-term expectations as a sign that consumers believe inflation will eventually return to more normal levels.
Inflation Expectations Rise While Labor Outlook Brightens
The report also delivered encouraging news about the nation’s labor market. Consumers expressed greater confidence in their employment prospects as recent job growth continued to exceed expectations.
The perceived probability of losing a job during the next 12 months declined by one percentage point to 14.1%. At the same time, the perceived likelihood of finding a new job after losing one increased by 1.2 percentage points to 44.9%.
Those improvements coincide with several months of steady hiring across the U.S. economy. While hiring has moderated from the rapid pace seen after the pandemic, employers continue adding jobs, helping ease concerns about a significant slowdown.
For residents across the San Gabriel Valley, a stronger labor market may provide greater financial stability even as households continue managing higher housing, grocery and insurance costs. Consumer confidence in employment often plays a key role in decisions involving home purchases, vehicle financing and other major investments.
Inflation Expectations Rise Amid Economic Uncertainty
Although inflation remains above the Federal Reserve’s long-term target, the latest survey suggests consumers are becoming more confident that the economy will remain stable.
Housing professionals, retailers and financial analysts closely monitor inflation expectations because they can influence consumer spending, borrowing and investment decisions. If inflation continues to moderate while employment remains strong, economists say the economy could be positioned for steadier growth during the second half of 2026.
For households throughout the San Gabriel Valley, the combination of improving job confidence and relatively stable long-term inflation expectations may offer cautious optimism despite ongoing affordability challenges. More information about the Survey of Consumer Expectations is available from the Federal Reserve Bank of New York at https://www.newyorkfed.org/microeconomics/sce.
