Most Consumers Worry About Finances as Inflation Expectations Worsen

Consumers are girding for higher inflation over the short term and long term, while sentiment is souring on job prospects for the next few months.

The August 2025 Survey of Consumer Expectations (SCE) conducted by the New York Fed released Monday (Sept. 8) indicates that the volatility seen in recent weeks in the labor market, and the volatility surrounding tariffs, continues to have an impact on how households view their current and future situations.

The assessments deteriorated across most metrics.

Median short-term inflation expectations edged up 0.1 percentage point to 3.1%, while three-year expectations remained unchanged at 3.0% and long-term expectations rose 0.3 percentage point to 2.9%.

Inflation uncertainty continued to decline, extending a three-month trend. Median home price change expectations stayed flat at 3.0% for the third consecutive month, which means that a significant source of perceived wealth (i.e., home equity) has been viewed as roughly stagnant.

Expectations for commodity prices fell in three of the six categories measured and remained unchanged in the other three.

Health Care Costs in the Crosshairs

Some of the key areas of spending, touching on everything from healthcare to shelter, are unlikely to provide much relief.

Consumers now expect medical care prices to rise 8.8% over the next year, 3.7 percentage points lower than in July. Rent expectations also eased, with the median one-year-ahead increase falling to 6%, down from 7% in July (a 14% decline). Expectations for food and gasoline prices were unchanged at 5.5% and 3.9%, respectively.

Warily Viewing the Job Market

Job-finding expectations fell sharply, from 51% in July to 45% in August, an 11% decline and the lowest level since the series began in 2013. The decline was broad-based, with the weakest expectations among consumers over age 40, those earning less than $50,000 per year (38% expect to find a job in the next three months), and those with lower education levels (36%). At the same time, the mean probability that the unemployment rate will be higher one year from now rose to 39%, up from 37% in July. Median one-year-ahead expected earnings growth slipped to 2.5%.

Job prospects and increased wages are directly correlated to moving out of the realm of living paycheck to paycheck. As reported earlier in the month, PYMNTS Intelligence has documented that consumers need at least $90,000 to $95,000 in annual household income, or $70,000 to $75,000 in annual personal income, to be more likely to be living paycheck to paycheck by choice than by necessity.

Mixed Picture on Household Finances

Regarding household finances, the share of households reporting they are better off than a year ago edged down to 20%. Median household income growth expectations decreased slightly to 2.9%. However, expectations improved for some groups: Consumers over age 60 saw expected income growth rise to 2.5% from 2.3% in July, while those earning under $50,000 per year also reported an increase to 2.5%. Median household spending growth expectations rose to 5%, matching the level last seen in May 2025.

Debt delinquency expectations worsened: The mean probability of missing a minimum debt payment within the next three months increased to 13.1% in August, up from 7% previously. Consumers under 60 reported being most at risk of early delinquency.

Despite these concerns, optimism about the future ticked up from recent lows, though hardly represent  a whopping endorsement of where things are headed: 29% of households expect to be better off a year from now, the highest reading since February 2025, but that means that the majority of consumers expect things to be status quo at best, or for their finances to worsen.