Americans are growing more pessimistic about their household finances as living costs stay elevated.
In the New York Federal Reserve’s latest monthly survey, 43.7% of households felt worse than they did a year ago. The share expecting their finances to improve over the coming year also shrank, pushing the net optimism level to its lowest point since October 2022.
Stretched household budgets
The strain is showing up in expected price increases for day-to-day items. Year-ahead inflation expectations eased to 3.5% in May, but consumers still see food prices rising 5.8% and rent 7.4% over the next year.
Those pressures are forcing households to stretch paychecks further. Wages rose at an annual rate of 3.4% in May, while consumer prices have been rising faster. The squeeze has led to tangible borrowing strain, with card delinquencies highest since 2011.
Beyond daily expenses, the survey points to growing anxiety about the labor market:
- The perceived likelihood of losing a job within the next year rose above 15%, marking a six-month high.
- Confidence in finding new employment quickly fell, with the estimated probability of securing a job within three months dropping to 43.7%.
The survey comes as Federal Reserve officials prepare for their mid-June policy meeting. Policymakers are widely expected to hold benchmark interest rates steady in the 3.50% to 3.75% range. Consumers will get their next look at official price pressures on Wednesday, when the government releases the consumer price index for May.
