New York Fed: Americans are more pessimistic about their finances

Americans are increasingly worried about their financial outlook as they expect inflation to worsen in the coming year, according to a survey from the New York Federal Reserve released Wednesday.

The central bank’s monthly survey of consumer expectations found that consumers expect even higher inflation a year from now, while perceptions of their own financial situation have deteriorated.

More households surveyed reported being in a worse financial situation than a year ago and expect they will be in a weaker financial situation in the coming year, the New York Fed found. The New York Fed’s survey of consumer expectations polls a rotating panel of about 1,300 heads of household.

“This data is further evidence that Americans are worried about inflation getting worse before it gets better,” said Matt Schulz, chief credit analyst at LendingTree.

“Many Americans already live on tight budgets and are looking for ways to stretch their budget further,” he said. “Their gloomy outlook for inflation likely means many families expect to make sacrifices and difficult choices in the months ahead.”

Consumers are feeling the impact of rising prices for basic necessities like gasoline, other reports also show.

Gas prices increased by almost 4% in August and more than 27% compared to August 2025, according to the latest Consumer Price Index. Consumers paid a national average of $4.37 per gallon Wednesday, according to AAA, compared with about $3.12 a year ago.

High fuel costs also threaten to drive up prices of other consumer goods, at a time when Americans remain concerned about affordability and are largely dissatisfied with high prices, economists say.

“American consumers are feeling the pressure,” Heather Long, chief economist at Navy Federal Credit Union, said in an email. “Spending remained strong in August, but income growth is not keeping up. Many people are dipping into savings or using credit to continue spending and that is not sustainable.”

As perceptions and expectations about households’ future financial situation have deteriorated, expectations for income and spending growth have both increased, according to the New York Fed survey.

“The consumer continues to defy gravity,” Bank of America Global Research analysts said in an Oct. 1 note. However, soaring gas prices could weigh on discretionary spending and hit lower-income households hardest, the bank’s analysts said. “They could also spill over into food inflation, creating an additional headwind.”

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