NY Fed May Survey Shows Job-Finding Outlook Drops to Year Low, Inflation Expectations Largely Stable
0xBroomberg
The New York Fed's May consumer survey shows job-finding confidence at its lowest this year, while inflation expectations held roughly steady — a mixed signal that complicates the policy picture ahead of the June FOMC meeting.
Where do inflation expectations stand?
One-year inflation expectations edged down from 3.6% in April to 3.5%; the three-year and five-year readings held flat at 3.1% and 3.0%.
This means → the public still believes inflation will drift back toward the 2% target; long-run expectations remain anchored.
Cleveland Fed President Hammack said on June 2: "If we see expectations start to drift from the 2% goal, that would be a signal inflation psychology may be hardening. I don't see that now, but I'm watching closely."
What are the sub-components telling us?
Gasoline-price expectations came in at 5%, slightly down from April. But home-price expectations jumped from 3% to 3.5% — the highest since July 2022.
This means → energy-side pressure is easing modestly, yet housing-cost expectations are accelerating — the two are moving in opposite directions.
Reuters notes that Middle East tensions continue to drive energy prices and supply-chain disruption; April PCE inflation already hit 3.8% year-on-year.
What is going wrong with labor-market confidence?
Respondents' perceived probability of finding a job after losing one fell 2.3 percentage points to 43.7% — the lowest since last December.
Meanwhile, the perceived probability of becoming unemployed over the next 12 months rose 0.5 pp to 15.1%.
In plain terms = people think they are more likely to lose their jobs, and less likely to land a new one if they do — both ends are deteriorating.
Why is the quit-intention rate rising at the same time?
The expected probability of voluntarily leaving a job in the next year rose to its highest since February 2023, with gains across age, education, and income groups.
Voluntary quit intention is typically read as a positive signal of labor-market confidence — and it now diverges from the falling job-finding outlook.
This reflects a split in labor-market "feel": those still employed are willing to consider switching, but those who actually need a job are growing less confident they can get one.
How bad has household financial stress become?
The share of respondents saying their finances are worse than a year ago rose to the highest since January 2023.
The expected probability of missing a minimum debt payment in the next three months also climbed, concentrated among those with a high-school diploma or less and annual income below $100,000.
This means → financial stress is not evenly distributed — lower-income, lower-education households are bearing the brunt first.
What does this mean for the June Fed meeting?
The Fed is expected to hold its benchmark rate at 3.50%–3.75% at the June 16–17 meeting — the first chaired by new Chair Kevin Warsh.
Some officials have begun discussing whether a rate hike is needed to steer PCE inflation back to the 2% target.
In plain terms = inflation expectations haven't lost their anchor, but they haven't come down either; job-market confidence is weakening, yet Friday's payrolls beat expectations — the Fed faces a "data in conflict" hand, and standing pat is the most likely call.
Content is for reference only, not financial advice.