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Americans are increasingly reaching a tipping point regarding their household finances.
Despite slowing expectations after years of rising inflation, consumer pessimism has reached some of the worst levels in years, according to the Federal Reserve Bank of New York's monthly Survey of Consumer Expectations released Monday.
The percentage of US households that reported they were “worse off” financially from last year rose to 13.3% in May, up more than 2 percentage points from April and the highest reading since July 2022.
Additionally, 36% of Americans expect their financial conditions to deteriorate significantly in the next year, while less than 23% expect to improve, leading to the lowest optimism since October 2022.
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While overall inflation expectations remain unchanged, respondents expect higher costs up front, including a 5.8% increase in food prices and a 7.4% increase in rent over the next year.
More Americans report being “very poor” financially, according to a recent survey by the Federal Reserve Bank of New York. (Getty Images)
The Fed's latest survey is consistent with the Federal Reserve's most recent Beige Book, which summarizes economic conditions in all 12 Fed regions. Rates “increased at a moderate to strong pace, with most regions reporting higher inflation than in the previous report,” according to the Fed's national summary.
“States noted that energy-related costs related to the Middle East conflict were the main drivers of inflationary pressure, and shipping, packaging, groceries, and fertilizers,” said the report, the Cleveland Fed noted the increase in fuel costs.
Consumer concerns were also reflected in the labor market, with respondents reporting that their confidence in finding a new job if they lose their current one has dropped to its lowest level since December 2025. Less than half of workers (43.7%) said they believed they would be able to find another job if they were laid off.
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“Expectations in the labor market have deteriorated somewhat due to an increase in employment expectations and a decrease in employment expectations,” the New York Fed said in its release.
However, the Bureau of Labor Statistics reported on Friday that employers added 172,000 jobs in May, beating economists' estimates, and the unemployment rate stood at 4.3%.
Lindsay Rosner, head of diversified investments at Goldman Sachs Asset Management, called the May jobs report a “Payroll Blowout!” and added: “We have gained more confidence in the last notes that the Fed does not need to worry about the labor market. Laser focused on the money supply and it will all come down during this fight to determine the Fed's next move. For now, the move is inconsistent: HOLD.”
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The consumer report also showed that more than 1 in 8 Americans (12.6%) believe they may miss a small loan payment in the next 90 days. The increase was driven “mostly” by respondents with at least a high school education and families earning less than $100,000 a year.
Retired Americans over age 60 and workers earning less than $50,000 a year also reported lower expectations for spending growth.
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Eric Revell of FOX Business contributed to this report.
