Survey Shows Increased Consumer Concerns Amid Global Trade Tensions
In March, consumer confidence dipped as worries about inflation, unemployment, and stock market performance grew, according to the latest Survey of Consumer Expectations from the Federal Reserve Bank of New York. Respondents expressed concerns about a higher cost of living, with inflation expectations rising to 3.6% for the next year, marking the highest level since October 2023.
Inflation Worries Surge
The survey revealed a notable increase in inflation expectations, which climbed by half a percentage point from February. Consumers now expect inflation to rise by 3.6% over the next year, reflecting heightened concerns about everyday expenses. This surge in inflation worries comes amid an increasingly uncertain global trade environment, particularly as the trade war continues to escalate.
Labor Market Fears on the Rise
Alongside inflation concerns, the probability that the unemployment rate will be higher a year from now jumped to 44%. This marks a 4.6 percentage point increase, the highest level seen since the early days of the COVID pandemic in April 2020. The growing uncertainty surrounding the job market has contributed to a broader sense of unease among consumers.
Stock Market Sentiment Weakens
In addition to concerns over inflation and employment, consumer confidence in the stock market also took a hit. The percentage of respondents who expect the market to be higher a year from now dropped to 33.8%, the lowest level since June 2022. This decline reflects mounting anxiety about the direction of the economy amid the ongoing trade war and global market instability.
Gold’s Appeal Increases
Despite the negative outlook for equities, respondents expressed a more optimistic view of gold, with expectations for the precious metal rising by 5.2%, the highest forecast since April 2022. This shift indicates that consumers may be looking for safer investment options in the face of economic uncertainty and market volatility.
Long-Term Inflation Expectations Hold Steady
Looking further ahead, the survey indicated that long-term inflation expectations remained relatively stable. The five-year inflation outlook edged down slightly to 2.9%, while the three-year outlook stayed at 3%. However, the outlook for specific categories, such as food, rent, and medical care, saw increases, with respondents expecting food prices to rise by 5.2%, rent to increase by 7.2%, and medical costs to climb by 7.9%.
Gasoline Prices Expected to Stabilize
Gasoline price expectations saw a slight dip, with respondents forecasting a 3.2% increase in gas prices over the next year, down from a 3.7% projection in February. While this reflects some optimism about fuel price stability, overall, the survey paints a picture of growing consumer apprehension about rising living costs and economic uncertainty.
