Consumers have lower economic expectations for the coming year but generally don’t intend to spend less during the 2025 holiday season, the Federal Reserve Bank of New York reported on Tuesday. Photo by Cristobal Herrera-Ulashkevich/EPA-EFE
Rising food costs, combined with economic uncertainty, dampen consumers’ expectations for the coming year, the Federal Reserve Bank of New York’s latest consumer survey says.
Food costs rose by 2.7% in August compared to a year earlier, which has contributed to lowering consumers’ expectations regarding having a better year financially in 2025, the N.Y. Fed reported on Tuesday.
“Few things drive Americans’ perception of the economy more than grocery prices,” Lending Tree credit analyst Matt Schulz told CNBC.
“If people are convinced that those are just going to keep rising, it stands to reason that fewer people would think their own household’s financial situation would be better off a year from now,” Schulz added.
Many are concerned about the potential impact of tariffs on inflation and whether they would have an easier or a harder time paying their household bills, but they largely don’t expect to have trouble obtaining credit if needed.
They also expect to spend more during the upcoming holiday season, according to a report by KPMG.
Inflation expectations exceed those of household earnings, according to the N.Y. Fed’s survey.
Consumer responses indicate they anticipate an inflation rate of 3.4% for September and a five-year inflation rate of 3%, Seeking Alpha reported.
Consumers generally don’t expect their household earnings to match inflation in September, though.
Respondents mostly expected a 2.4% rise in earnings for September, which is the lowest since April 2021 and a full percentage point lower than their anticipated inflation costs.
More than 41% of those surveyed also said they expect unemployment to rise over the next year, and nearly 15% said there’s a chance they could lose their respective jobs.
Almost 21% said they might leave their jobs voluntarily at some time over the next 12 months.
The Federal Reserve Bank of New York compiles its Survey of Consumer Expectations once per month.
