Consumers’ short-term Inflation expectations hit their lowest level in two years, according to the Survey of Consumer Expectations, released today by the Federal Reserve Bank of New York. Consumers were also less worried about losing their jobs, with the average perceived probability of losing one’s job in the next 12 months reaching its lowest reading since April 2022.

Median inflation expectations declined by 0.3 of a percentage point at the one-year-ahead horizon to 4.1% — the lowest reading since May 2021.

Still, the report found that expectations increased slightly in the medium and longer term. Median inflation expectations increased by 0.1 of a percentage point at the three- and five-year horizons to 3.0% and 2.7%, respectively.

Labor market expectations were mixed, according to the report:

• The average perceived probability of losing one’s job in the next 12 months decreased by 1.3 percentage points to 10.9%, the lowest reading since April 2022 and only 0.1 percentage point above the series low. Meanwhile, the average probability of leaving one’s job voluntarily in the next 12 months decreased by 0.5 percentage point to 19.1%.
• Expectations of earnings growth eased. Median one-year-ahead expected earnings growth declined to 2.8% after staying unchanged at 3.0% for five consecutive months. The series has been moving within a narrow range of 2.8% to 3.0% since September 2021. The decline in expected earnings was more pronounced among respondents with no more than a high school education.
• Average unemployment expectations — or the average probability that the US unemployment rate will be higher one year from now — decreased by 1.8 percentage points to 40.0%, slightly below its 12-month trailing average of 40.6%.
• The average perceived probability of finding a job (if one’s current job was lost) increased to 56.4% in May from 55.2% in April. The increase was most pronounced for respondents with a household income between $50,000 and $100,000.

The survey is based on a nationally representative, internet-based survey of a rotating panel of approximately 1,300 household heads. Respondents participate in the panel for up to 12 months.