Overview

The New York Federal Reserve’s August Survey of Consumer Expectations shows that U.S. households continued to expect inflation of 3.6 % one year ahead and 3 % five years ahead, unchanged from the prior month. The three‑year ahead inflation expectation edged down to 3.2 %, a slight decline from 3.3 % recorded in July. Respondents also projected higher gasoline prices for the coming year.

Employment and Personal Finance Outlook

Consumer sentiment on employment and personal finances deteriorated in August. The expected unemployment rate one year ahead rose to its highest level since April 2020, reflecting lingering pandemic‑era concerns. Despite this, the perceived probability of losing a job fell compared with July, while the likelihood of securing new employment after an involuntary job loss also declined relative to the July survey. Participants gave lower assessments of both current and future financial situations and expressed reduced confidence in credit access now and in one year.

Upcoming CPI Release and Monetary‑Policy Context

The Consumer Price Index (CPI) for August is scheduled for release on Friday, a data point that several Federal Reserve officials indicated could be decisive for the policy meeting slated for 15‑16 September. The Fed’s benchmark overnight interest rate remains in the 3.50 %–3.75 % target range, with inflation still above the central bank’s 2 % goal.

Statements from Fed Officials

Fed Governor Christopher Waller said on Thursday that, should the forthcoming inflation report demonstrate continued progress toward the 2 % target, he would support keeping the policy rate at its current level. Cleveland Fed President Beth Hammack posted on LinkedIn on Friday that, given the inflation conditions in her district, it is time to act to reduce price pressures; she had voted for a rate increase at the late‑July meeting.

Key Takeaways

  • One‑year inflation expectations steady at 3.6 %; five‑year at 3 %; three‑year fell to 3.2 %.
  • Consumers anticipate higher gasoline prices and show weaker employment and financial outlooks.
  • Unemployment expectations hit post‑pandemic highs; confidence in job‑loss recovery and credit access declined.
  • Fed policy rate unchanged at 3.50‑3.75 %; officials signal readiness to hold or raise rates depending on August CPI.