U.S. consumers expect inflation to rise but stay optimistic about their finances, says New York Fed.

According to the latest report released by the New York Federal Reserve on Monday, despite the expectation of rising inflation in the coming years, American consumers remain optimistic about their future financial situations. The report indicates that in the November survey of consumer expectations, there was a general increase in inflation expectations. Specifically, consumers expect the inflation rate to reach 3% in the next year, slightly higher than October’s 2.9%; the three-year inflation expectation is 2.6%, also higher than last month's 2.5%; and the five-year inflation expectation has risen from 2.8% in October to 2.9%.

The New York Fed noted that educational level significantly impacts inflation expectations: groups without a college degree have lowered expectations for future inflation, while those with a degree expect inflation to rise. Moreover, despite rising inflation expectations, consumers generally believe that the increases in gas, rent, and food prices will slow in the coming year, particularly the anticipated rises in medical costs and college tuition fees. Meanwhile, the expected increase in house prices remains stable at 3%.

The report was released amid considerable uncertainty in the U.S. economy. President Trump's policy directions are expected to exacerbate price pressures, including higher tariffs on trade partners and tighter immigration controls. Additionally, Trump's proposed tax cuts and substantial spending plans are anticipated to significantly increase the fiscal deficit, adding uncertainty to the U.S. economic outlook.

The Federal Reserve is expected to cut the benchmark interest rate by 0.25 percentage points during the policy meeting on December 17-18, but due to the uncertainty of Trump's policies and persistent inflationary pressures, the future direction of monetary policy remains unclear.

Nevertheless, consumers maintain a fairly optimistic outlook on the future economic situation. The survey shows that respondents have increased expectations for income and wage growth, although confidence in the job market has declined. Most consumers remain stable in their current financial situation and hold a positive view of their future finances. The proportion of consumers expecting their financial situation to improve in the coming year has reached its highest level since February 2020, while those anticipating deterioration is at its lowest since March 2021.

The survey also reveals a decline in consumers' expectations of overdue debt risk and predicts an increase in savings account interest rates in the coming year, contrasting with the Fed’s rate cut expectations. Despite economists generally predicting that Trump's policies will increase the fiscal deficit, the New York Fed's survey shows that consumers' expectations for government debt growth have dropped to their lowest level since February 2020.

Overall, despite the pressure of rising inflation, American consumers remain optimistic about future income growth, improvements in financial conditions, and rising savings rates.

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.