US consumers more worried about job market in December, New York Fed report says

• Job market pessimism was particularly acute among households earning under $100,000 per year, with survey respondents reporting the lowest confidence in finding employment if jobless since tracking began in 2013
• One-year inflation expectations increased to 3.4% in December from 3.2% in November, while longer-term expectations (three- and five-year) remained steady at 3%, which Fed officials monitor more closely for policy decisions
• Expectations of missing a debt payment rose to the highest level since April 2020, and households reported credit is growing harder to access despite feeling more upbeat about their overall financial situations

Summary

The New York Federal Reserve's December Survey of Consumer Expectations revealed growing concerns about the U.S. job market despite easing worries over personal finances. Job-finding prospects hit their worst level since the survey began in 2013, with households earning under $100,000 particularly affected.

Key Findings:

• Inflation expectations: Year-ahead inflation projection rose to 3.4% from 3.2% in November; three- and five-year expectations held steady at 3.0%
• Job market concerns: Probability of losing a job increased versus November, while expectations of voluntary job changes declined
• Financial outlook: Households reported improved current and expected financial situations, though credit access tightened and debt payment concerns reached highest levels since April 2020

Market Context:

The Fed cut its benchmark rate by 25 basis points in December to a range of 3.50%-3.75%, balancing job market risks against inflation still above the 2% target. The unemployment rate stood at 4.6% in November. Fed officials characterize the current environment as a "low-hire, low-fire" job market.

The rise in near-term inflation expectations coincides with anticipated price pressures from potential Trump administration tariffs, though many Fed officials expect these impacts to be temporary. Philadelphia Fed President Anna Paulson suggested "modest further adjustments" to rates may be appropriate later in 2026 if economic conditions align with expectations.

Survey respondents also anticipated slightly higher income growth alongside declining expectations for spending and earnings growth, reflecting mixed consumer sentiment as the year ended.