A recent survey by the Federal Reserve Bank of New York reveals that Americans are less worried about inflation in May. This shift comes after President Donald Trump scaled back some of his toughest tariff plans.
The survey, called the Survey of Consumer Expectations, found that the expected inflation rate for the next year dropped to 3.2%, down 0.4 percentage points from April.
Expectations for inflation three years ahead fell to 3%, and the five-year forecast decreased slightly to 2.6%. Although these figures remain above the Fed’s 2% target, they show a clear easing of inflation fears.
This change coincides with Trump’s decision to delay some tariff increases. Initially, he had imposed a 10% tariff on all U.S. imports and planned additional tariffs on many countries. However, he later paused these extra tariffs to allow for negotiations lasting 90 days, ending in July.
The survey also showed improvements in other areas. Fewer people expect to lose their jobs in the coming year, dropping to 14.8%. Confidence in the stock market rose slightly, with 36.3% of respondents expecting higher stock prices in a year.
Expectations for price increases in gas, medical care, college education, and rent all fell, while food prices were expected to rise by 5.5%, the highest since October 2023.
National Economic Council Director Kevin Hassett highlighted that inflation measures have been falling for over four years, despite rising tariff revenues.
The Fed’s preferred inflation measure, the personal consumption expenditures price index, stood at 2.1% in April, the lowest since early 2021.
Overall, the survey suggests a more optimistic outlook among consumers about inflation and the economy, easing concerns about tariff-driven price increases.
Read more:
