NY Fed: Consumers Feeling Gloomier About Financial Futures

New data shows growing financial pessimism among Americans, the latest sign of shaky consumer confidence.

The February installment of the Federal Reserve Bank of New York’s Survey of Consumer Expectations, released Monday (March 10), shows that while households’ medium and long-term inflation expectations were unchanged, consumers were less optimistic about their future financial situations.

According to the bank’s Center for Macroeconomic Data, this was accompanied by marked declines in expectations about unemployment, delinquency and credit access.

“Perceptions about households’ current financial situations compared to a year ago were mostly unchanged, but year-ahead expectations about households’ financial situations deteriorated considerably,” the NY Fed said in a news release.

“The share of households expecting a worse financial situation in one year from now rose to 27.4%, the highest level since November 2023.”

For example, the research found that the average perceived probability of missing a minimum debt payment in the next three months rose by 1.3 percentage points to 14.6%, the highest level in nearly five years. This increase was driven by Americans without a college degree, and was largest among consumers under 40.

The research also found that a larger portion of households say that accessing credit has grown more difficult, while a smaller share said getting credit is easier.

“Expectations for future credit availability deteriorated considerably in February, with the share of respondents expecting it will be harder to obtain credit a year from now increasing to 46.7% from 35.6%,” the release said. “This reading is the highest since June 2024.”

The report comes two weeks after The Conference Board released its February Consumer Confidence Index, showing the largest monthly drop since August 2021.

Although consumers’ view of present business conditions improved, their expectations on current labor market conditions, future business conditions, future income and future employment prospects all deteriorated, the research found.

“References to inflation and prices in general continue to rank high in write-in responses, but the focus shifted towards other topics,” Stephanie Guichard, senior economist, global indicators at The Conference Board, said in a news release. “There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current Administration and its policies dominated the responses.”

Also Monday, a trio of banking regulators — the Federal Reserve Board, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency — released findings showing weakening credit quality among borrowers who owe more than $100 million.

As covered here, the regulators attributed the weakened credit quality trends to “the pressure of high interest rates on leveraged borrowers and the compressed operating margins in some industry sectors.”