US Consumers' Inflation Fears Ease, Reflecting Optimism Over Trade Talks

One-Year Inflation Expectations Drop to 3.2%, Down 0.4 Percentage Points from Previous Month
Medium- and Long-Term Outlooks Also Decline, Easing Inflation Concerns

Concerns about rising prices among Americans eased noticeably last month. This appears to be due to President Donald Trump partially retracting his aggressive tariff policies and engaging in trade negotiations with major countries, which helped calm fears of a sharp spike in inflation.

Reuters Yonhap News

According to the May consumer expectations survey released by the Federal Reserve Bank of New York on the 9th (local time), the inflation outlook for the next year was recorded at 3.2%, down 0.4 percentage points from the previous month.

The inflation outlook for three years ahead was 3.0%, and for five years ahead, 2.6%. These figures are 0.2 percentage points and 0.1 percentage points lower, respectively, compared to the previous month. The data indicate that expectations for inflation are declining not only in the short term but also in the medium to long term, suggesting that anxiety over a sharp rise in prices is subsiding.

Consumers expected lower rates of increase in major spending categories such as gas, medical expenses, college tuition, and rent one year from now. In contrast, they anticipated that food prices would rise by 5.5%, marking the largest increase since October 2023.

The employment outlook also improved. The New York Fed survey showed that the proportion of people worried about the possibility of losing their jobs within the next year fell by 0.5 percentage points to 14.8% compared to the previous month. During the same period, the probability of voluntary resignation rose by 0.1 percentage points to 18.3%. The share of respondents who believe the unemployment rate will be higher one year from now dropped by 3.3 percentage points to 40.8% from the previous month.

Additionally, the likelihood of failing to repay debt within the next three months fell by 0.5 percentage points from the previous month to 13.4%, the lowest level since January of this year.

These survey results came as the United States and China agreed to lower their respective tariff rates by 115 percentage points each during high-level trade talks held last month in Geneva, Switzerland. As concerns over tariff hikes eased, consumers’ expectations that the extreme trade conflict would subside appear to have grown. The United States and China resumed a second round of high-level trade negotiations in London, United Kingdom, starting that day.

The New York Fed stated, "Household inflation expectations declined across both the short and medium term," and added, "Consumers’ pessimistic outlook on the labor market has eased somewhat, and their expectations regarding consumer debt delinquency rates and household financial conditions have also improved slightly."

This content was produced with the assistance of AI translation services.