American households expect to spend more over the next year even as they report worsening finances, according to the Federal Reserve Bank of New York’s September Survey of Consumer Expectations, released October 7. One-year inflation expectations rose to 3.9%, and expected household spending growth climbed to 5.5%, both the highest readings since May 2023.
Key Takeaways
- Median one-year inflation expectations rose to 3.9% in September from 3.6% in August, the highest since May 2023.
- Expected household spending growth climbed to 5.5%, also the highest reading since May 2023.
- Larger shares of households said they are worse off than a year ago and expect to be worse off a year from now.
- Households rated their access to credit as worse but became less worried about missing a minimum debt payment.
- Expected price increases over the next year reached 9.2% for medical care, 7.5% for college, 6.8% for rent, 5.5% for food and 4.8% for gas.
- Three-year inflation expectations rose to 3.3%, while five-year expectations held at 3.0%.
Households Expect to Spend More While Feeling Worse Off
The New York Fed’s September survey shows a gap between what households expect to spend and how they feel about their money. Median expected household spending growth rose to 5.5%, the highest since May 2023. At the same time, more respondents said their financial situation is worse than a year ago, and more expect it to be worse a year from now.
That combination is a warning sign for household balance sheets. When people expect to spend more mainly because prices are rising, not because incomes are, the difference usually comes out of savings or goes onto credit. The survey’s category data points that way. The increases households expect are concentrated in costs they can’t easily cut, such as rent, medical care and food.
Inflation Expectations Climb Across Necessities
The New York Fed survey found households expect price increases in every category it tracks. Expected medical care costs rose to 9.2%, college costs to 7.5% after a 1.4-point jump, rent to 6.8%, food to 5.5% and gas to 4.8%.
For household net worth, that list matters more than the overall figure. Rent, healthcare, tuition and groceries take up a large share of the budget for younger and middle-income households, which also tend to have the thinnest savings. A family facing a 6.8% rent increase and a 9.2% rise in medical costs is unlikely to cover both from wage growth alone.
Longer-term expectations were steadier. Three-year expectations rose slightly to 3.3% from 3.2%, while five-year expectations held at 3.0%. Households seem to see the pressure as concentrated in the near term, even if they no longer expect prices to return to the Federal Reserve’s 2% target soon. The survey also found that respondents’ uncertainty about inflation increased.
Credit Access Tightens as Debt Worries Ease
The New York Fed survey’s credit findings point in two directions. Households said access to credit has gotten harder and expect it to stay difficult. Yet they became less worried about missing a minimum debt payment over the next three months.
The labor market helps explain that. Respondents were less likely than in August to expect higher unemployment or to lose their own job, and more confident they could find work if they did. Steady paychecks make debt payments feel manageable even as borrowing gets harder and more expensive.
Borrowing costs are a real concern for households that rely on credit. The Federal Reserve raised its benchmark rate to 3.75%–4% in September, and minutes released the same day as the survey show most officials see another increase as likely by year end. Credit card rates, home equity lines and other variable-rate debt follow the Fed’s moves. Freddie Mac’s average 30-year mortgage rate reached 7.40% on October 8, the highest since November 2023.
Consumer Sentiment Confirms the Strain
Other data shows the same pattern. The University of Michigan’s consumer sentiment index fell to 48.1 in September, a four-month low, and its 12-month inflation outlook rose to 4.6% from 4.0% in August.
That puts holiday spending in a difficult position. Retailers are counting on a strong season, with holiday retail forecasts projecting a $1.7 trillion season that September’s confidence slump is already testing. If households follow through on higher spending while feeling worse off, more of that holiday shopping is likely to go on credit.
What the Survey Means for Household Balance Sheets
For households trying to protect their net worth, the survey points to a few areas to check. The first is the gap between expected spending growth and expected income growth. Households that expect spending to rise 5.5% need to know whether their pay will keep up, or whether savings will cover the difference.
The second is variable-rate debt. With another rate hike possible before year end, balances on credit cards and home equity lines get more expensive to carry. Reviewing those balances before the Fed’s December meeting gives households time to plan.
The third is emergency savings. Rising costs for essentials and tighter credit leave less room to absorb unexpected bills without borrowing. Setting aside cash, even in small amounts, reduces the need to rely on credit when a large expense comes up.
The labor market is the main offset. As long as households expect to keep their jobs, they can handle higher costs through income. The survey suggests that cushion is still in place, but it is carrying more of the load as finances tighten elsewhere.
Disclaimer: This article is provided for general informational purposes only and should not be considered financial, investment, credit, economic, or personal financial advice. The information and data discussed are based on survey results and other cited economic indicators and may change as new data becomes available. Readers should consider their individual financial circumstances and consult a qualified financial professional before making decisions about borrowing, debt, savings, spending, or investments.
FAQs
What did the New York Fed’s September 2026 consumer survey show?
The survey showed one-year inflation expectations rising to 3.9%, expected household spending growth climbing to 5.5%, and more households reporting a worse financial situation than a year ago.
What are Americans’ inflation expectations for the next year?
The median one-year inflation expectation was 3.9% in September 2026, up from 3.6% in August and the highest since May 2023.
Which prices do households expect to rise the most?
Households expect medical care costs to rise 9.2%, college costs 7.5%, rent 6.8%, food 5.5% and gas 4.8% over the next year.
Are households worried about paying their debts?
Households rated credit access as worse but became less worried about missing a minimum debt payment, helped by a more confident outlook on jobs.
When is the New York Fed Survey of Consumer Expectations released?
The New York Fed publishes the survey monthly. The September 2026 results were released on October 7, 2026.
