Consumers Feel Better About Finances Despite Inflation Woes

American consumers feel more optimistic about their finances, but wary of several other economic factors.

That’s according to the July 2025 Survey of Consumer Expectations, released Thursday (Aug. 7) by the Federal Reserve Bank of New York’s Center for Microeconomic Data, showing, among other things, consumers’ short- and long-term inflation expectations increasing.

“Consumers expect smaller growth in their tax payments and are more optimistic about their household financial situations,” the central bank said in a news release.

“Expectations about the labor market were mixed with consumers reporting greater likelihoods of losing and finding jobs, and a lower likelihood of a rise in overall unemployment.”

The survey, conducted between July 1 and July 31, found that median inflation expectations in July rose at the one-year-ahead horizon to 3.1% from 3.0% and at the five-year-ahead horizon to 2.9% from 2.6%. They held steady at the three-year-ahead horizon at 3.0%.

Median inflation uncertainty — or the uncertainty expressed on future inflation outcomes — fell at the one-year and three-year horizons and held steady at the five-year horizon.

Median home price growth expectations remained unchanged at 3.0%. This series has been moving in a narrow range between 3.0% and 3.3% since August 2023.

The survey also found slight dips in price change expectations for things like gas, medical care, education and rent, with expectations for food prices unchanged.

“Perceptions about households’ current financial situations compared to a year ago and expectations about year-ahead financial situations both improved,” the report said. “Smaller shares of respondents reported that their households are worse off than a year ago or are expecting to be worse off a year from now.”

The number of households who said it would be easier than harder to get credit fell, while expectations for future credit availability improved.

As PYMNTS wrote earlier this week, retail spending has been better than expected, but there are still places where sentiment is still muted, such as travel and luxury goods.

“Get a bit more granular, and income makes a difference,” that report said. “Our data found that consumers who do not live paycheck to paycheck with issues paying their bills are 2.4 times more likely to keep their purchasing habits at the same level amid price increases compared to those struggling financially.”

And as noted here Thursday, the ongoing tariff situation has led to increasing uncertainty, with 47% of consumers reporting they couldn’t find or afford everyday items because tariffs interrupted supply chains or drove up prices.