Federal Reserve: U.S. consumer inflation expectations rose in July, outlook on the labor market improved

According to the monthly survey data released by the New York Federal Reserve on Thursday, U.S. consumers' inflation expectations rose in July, while their views on the job market improved. Specifically, the July survey showed that people's inflation expectations for the next year increased from 3% in June to 3.1%, the three-year inflation expectation remained unchanged at 3%, and the five-year inflation expectation rose from 2.6% to 2.9%, the highest level since February of this year. Expectations for median home price growth remained unchanged at 3.0%. Since August 2023, this series of data has fluctuated slightly between 3.0% and 3.3%. Media analysis pointed out that the rise in inflation expectations will strengthen the views among Federal Reserve officials who tend to delay interest rate cuts to assess the impact of tariffs on inflation. The Federal Reserve has kept interest rates unchanged this year, but market investors are increasingly betting that they will cut rates at the September policy meeting. The latest monthly inflation data shows that prices of goods most affected by tariffs rose in June, although the overall inflation level remains relatively moderate. The U.S. Bureau of Labor Statistics will release the July Consumer Price Index (CPI) report on August 12. Federal Reserve officials are also closely monitoring the dynamics of the labor market, where hiring activity appears to be significantly slowing down, strengthening the case for rate cuts. However, the New York Federal Reserve's survey showed that more consumers were willing to voluntarily leave their jobs in July, and they believed their chances of finding work in the next three months had slightly increased, although this indicator remains below the average level in recent years. Against the backdrop of high interest rates and slowing hiring, an increasing number of American households are facing difficulties in repaying loans. In the second quarter of this year, the proportion of severely delinquent consumer debt in the U.S. rose to the highest level since early 2020, reflecting a surge in student loan delinquencies. Meanwhile, consumer spending in the U.S. declined in the first half of the year. The New York Federal Reserve's survey also found that more households reported that obtaining credit had become difficult, and the proportion of those who believed they might not be able to make the minimum payment in the next three months also increased. Nevertheless, the proportion of households expecting their financial situation to improve in the next year rose for the second consecutive month, while the proportion of those who felt "worse off than a year ago" fell to the lowest level since January 2022.