Despite these short-term worries, consumers appear less concerned about the long-term inflation outlook: expectations for inflation three years from now held steady at 3%, and the five-year forecast dipped slightly to 2.9%.

Economists note that this pattern—rising short-term but stable long-term expectations—suggests that Americans view current price pressures as temporary rather than a sign of persistent inflation.

The backdrop to these shifting attitudes includes ongoing uncertainty over federal economic policy and the impact of aggressive trade measures. President Donald Trump’s continued use of tariffs has fueled concerns that import costs could increase prices, potentially reigniting inflationary pressures. However, the survey indicates that most consumers expect these effects to be short-lived rather than permanently dragging the economy.

So far, the broader economy has shown resilience. The U.S. labor market has maintained a four-year streak of employment gains, supporting robust consumer spending and economic growth. Yet, analysts warn that if pessimism continues to deepen, it could prompt households to cut back on spending, which might slow business investment and overall economic momentum.

The survey also highlighted a decline in expectations for household income growth and a more negative outlook on personal finances and credit access. Stock price expectations fell to their lowest level since mid-2022, reflecting broader market volatility and uncertainty. Meanwhile, the share of consumers anticipating a recession in the next year remains elevated, underscoring the fragile mood.

The Federal Reserve pays close attention to these expectations, which can become self-fulfilling. If consumers believe prices will rise, they may accelerate purchases or demand higher wages, potentially driving inflation higher. Conversely, reducing spending could slow the recovery if fears about job losses and economic downturns take hold.