Consumer Sentiment in 2025: Inflation and Unemployment Worries Rise
In early April 2025, rising concerns about inflation, unemployment, and the effects of the ongoing global trade tensions have emerged, as highlighted by a recent Survey of Consumer Expectations released by the Federal Reserve Bank of New York. The insights gathered from this monthly survey indicate a significant shift in consumer sentiment.
Inflation Concerns on the Upswing
According to the survey, respondents projected a one-year inflation rate of 3.6%, marking a notable increase of 0.5 percentage points from the previous month, reaching the highest level since October 2023. This uptick in inflation expectations mirrors growing consumer anxiety about the rising cost of living.
Labor Market Anxiety
Additionally, fears regarding the labor market have escalated, with expectations for a higher unemployment rate increasing to 44%, an uptick of 4.6 percentage points. This level of concern reflects sentiments not seen since the early days of the Covid-19 pandemic in April 2020, suggesting that consumers are bracing for potential economic challenges ahead.
Stock Market Sentiments Deteriorate
The survey also highlighted growing skepticism about the stock market, with only 33.8% of respondents expecting market prices to improve over the next year. This figure represents a decline of 3.2 percentage points, marking the lowest level recorded since June 2022. Conversely, expectations for gold prices are more optimistic, with a projected rise of 5.2%, the highest since April 2022.
Comparisons with Other Surveys
These findings align with other measures of consumer confidence, such as the University of Michigan’s consumer sentiment survey, which reported expectations for the next year at their highest since November 1981.
Impact of Trade Policies
Notably, these consumer sentiment shifts occurred prior to President Donald Trump’s tariff announcements on April 2. Despite expectations for these tariffs, market indicators suggest that inflation concerns among traders remain low. Nevertheless, there is substantial apprehension regarding the economic implications of these trade policies.
Specific Price Predictions
When examining specific commodities and services, respondents anticipate the following changes over the next year:
- Food prices: expected to rise by 5.2%, the highest since May 2024.
- Rent costs: projected to increase by 7.2%, an uptick of 0.5 percentage points.
- Medical care expenses: forecasted to rise by 7.9%, the most significant jump since August 2024.
- Gasoline prices: anticipated to increase by 3.2%, which reflects a slight drop of 0.5 percentage points compared to February’s outlook.
Join CNBC Pro LIVE for More Insights
To gain deeper insights into these economic trends and more, join us for CNBC Pro LIVE, scheduled for June 12, 2025, at the New York Stock Exchange. This event will feature expert analyses and opportunities to connect with industry leaders.