New York Fed survey shows stable inflation expectations, mixed U.S. labor outlook

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Highlights

New York Fed October survey shows unchanged median inflation expectations at 3.9% (1-year), 3.3% (3-year), and 3.0% (5-year), with lower inflation uncertainty short-term.
U.S. labor outlook mixed: probability of unemployment rising in the next year jumps to 45.3%, job loss risk to 13.9%, but job-finding probability increases to 46.5%.
Household spending and income expectations remain broadly stable, but perceived probability of missing a debt payment rises to 13.8%, the highest since December 2025.

October survey signals steady prices, weaker hiring confidence

As reported by Federal Reserve Bank of New York, median inflation expectations are unchanged in October at 3.9% for one year ahead, 3.3% for three years ahead, and 3.0% for five years ahead. The survey, fielded from Oct. 1 through Oct. 31, also shows lower inflation uncertainty at the one- and three-year horizons, while five-year uncertainty is unchanged.

Households' home price growth expectations hold at 3.0%, just below the 12-month trailing average of 3.1%. Expected price increases fall for gas to 4.2% and remain unchanged for food at 5.5%, while expectations rise for medical care to 9.3%, college education to 7.6%, and rent to 7.7%.

On the labor side, the survey points to a more mixed picture. Mean expectations that the U.S. unemployment rate will be higher a year from now rise by 1.4 percentage points to 45.3%, the highest level since April 2020, while the perceived probability of losing a job in the next 12 months increases to 13.9%. At the same time, the perceived probability of finding a job after losing one climbs to 46.5%, its highest level since November 2025, while expected earnings growth stays unchanged at 2.6% and the expected quit rate falls to 19.4%.

Household finances show steady spending, rising delinquency concerns

Income and spending expectations are broadly stable in the October survey, but signs of financial strain are becoming more visible. Median expected household income growth edges down by 0.1 percentage point to 3.0%, while expected household spending growth slips by 0.2 percentage point to 5.3%, still above its 12-month trailing average.

Perceptions of credit access and expectations for future credit availability are roughly unchanged. However, the average perceived probability of missing a minimum debt payment over the next three months jumps by 1.6 percentage points to 13.8%, the highest since December 2025, while expected tax increases at current income levels rise to 3.8%.

Respondents also expect slower growth in government debt, with the median view easing to 9.7%, though that remains above the trailing average. The perceived probability that savings account rates will be higher in 12 months rises to 31.6%, the highest since April 2023, while the mean probability that U.S. stock prices will be higher a year from now dips slightly to 40.0%.

Earlier, we reported that 10-year Treasury yields hit 5.3%, pushing 30-year mortgage rates to 7.5%.

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