The latest consumer survey from the Federal Reserve Bank of New York indicates a significant surge in U.S. inflation expectations in March, primarily driven by soaring oil price expectations to a four-year high. Simultaneously, confidence in the labor market continued to deteriorate, and expectations for household financial conditions also weakened.
The March 2026 Survey of Consumer Expectations, released by the Federal Reserve Bank of New York on Monday, showed that one-year inflation expectations rose to 3.4% from 3.0% in February, an increase of 0.4 percentage points, matching the high seen in April 2025. Three-year inflation expectations saw a slight increase of 0.1 percentage points to 3.1%, while five-year expectations remained unchanged at 3.0%.
This jump in short-term inflation expectations was mainly driven by a substantial increase in expectations for gasoline prices – respondents' expectations for the increase in gasoline prices over the next year surged by 5.3 percentage points to 9.4%, the highest level since March 2022.
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Released just before Friday's CPI report, these figures are timely for the market. The rise in inflation expectations, coupled with the simultaneous deterioration of labor market confidence, makes the Federal Reserve's monetary policy outlook more complex. On one hand, inflationary pressures are reigniting; on the other, concerns in the job market are deepening, potentially fueling discussions about stagflation risks.
<h2>Soaring Oil Price Expectations Drive Up Expectations for Multiple Commodity Inflation</h2>
In this survey, the surge in gasoline price expectations was particularly prominent, serving as the core factor pulling up overall short-term inflation expectations. The increase in respondents' expectations for gasoline price hikes over the next year jumped by 5.3 percentage points from the previous level to 9.4%, a reading not seen since March 2022.
Expectations for other commodity prices and the cost of living also rose generally, but to a lesser extent. Food price expectations increased by 0.7 percentage points to 6.0%; rent price expectations rose by 1.2 percentage points to 7.1%; healthcare cost expectations remained unchanged at 9.7%; and university education cost expectations slightly decreased by 0.1 percentage points to 9.0%.
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Concurrently, uncertainty about inflation prospects among respondents also increased. The survey indicates that uncertainty measures for inflation across all time horizons have risen, suggesting widening divergence in consumers' judgments about future price trends.
<h2>Continued Deterioration of Labor Market Confidence</h2>
Alongside rising inflation expectations, respondents' pessimism about the labor market is also intensifying. The survey shows that the average probability expected by respondents for the U.S. unemployment rate to rise over the next year increased by 3.6 percentage points to 43.5%, the highest level since April 2025.
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At the individual employment level, the average probability of losing one's job in the next 12 months increased by 0.6 percentage points to 14.4%, although it remains slightly below the 12-month rolling average of 14.6%. Notably, the willingness to voluntarily leave a job (expected quit rate) increased significantly by 2.4 percentage points to 18.3%.
On the other hand, confidence in finding a new job after unemployment improved, with the expected probability rising by 1.9 percentage points to 45.9%. This improvement was observed across different age, education, and income groups, but the reading is still below the 12-month rolling average of 47.5%.
In terms of wage expectations, the median expectation for income growth over the next year decreased by 0.1 percentage points to 2.4%. This is not only lower than the 12-month rolling average of 2.6% but also at the lower end of the range observed since May 2021 (2.4% to 3.0%).
<h2>Weakening Expectations for Household Financial Conditions Across the Board</h2>
Consumers' assessments of their own financial situations are also deteriorating. The survey indicates that the proportion of households reporting worsened financial conditions increased compared to a year ago, while the proportion reporting improved conditions decreased. Expectations for financial conditions over the next year are also pessimistic, with the proportion of households expecting their financial situation to worsen reaching its highest level since April 2025.
Regarding spending and debt, the median expectation for household spending growth over the next year slightly increased by 0.2 percentage points to 5.1%, while the expectation for household income growth remained unchanged at 2.9%. The average probability of being unable to repay minimum debt within the next three months rose by 0.7 percentage points to 12.3%. This pressure is most pronounced among individuals aged over 60, those with some college education, and those with an annual income below $50,000.
In terms of credit and asset expectations, respondents' perception of current credit accessibility has improved, but expectations for future credit availability have slightly worsened. The average probability that respondents expect the U.S. stock market to rise over the next 12 months decreased by 1.6 percentage points to 36.3%. Furthermore, the median expectation for the increase in U.S. government debt over the next year rose by 0.6 percentage points to 9.8%, significantly higher than the 12-month rolling average of 7.4%.

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The Federal Reserve Bank of New York's March consumer survey revealed multiple concerns: one-year inflation expectations in the U.S. jumped to 3.4%, expectations for gasoline prices surged by 5.3 percentage points to 9.4%, reaching a new high since March 2022. Meanwhile, expectations for rising unemployment touched a near one-year high, and expectations for deteriorating household finances climbed concurrently, while wage expectations fell to the lower end. The dual pressures of inflation and employment have suddenly intensified discussions about stagflation risks, exacerbating the Federal Reserve's policy dilemma

- The New York Fed's March consumer survey indicates a significant rise in U.S. inflation expectations, driven largely by a surge in gasoline price forecasts, which reached a four-year high.  
- Concurrently, confidence in the labor market is deteriorating, with consumers anticipating an increase in unemployment rates and a decline in personal financial expectations.  
- The survey reveals growing uncertainty about future inflation, as well as rising concerns over household financial situations and credit accessibility.

New York Fed: Driven by Oil Prices, Inflation Expectations Are Rising Sharply