According to the consumer expectations survey released by the Federal Reserve Bank of New York on Monday, concerns about inflation among Americans have significantly eased due to President Trump retracting some of his most aggressive tariff proposals in May.
The survey shows that the public's inflation expectations for the next year have dropped sharply to 3.2%, a decrease of 0.4 percentage points from April; the three-year inflation expectation also fell by 0.2 percentage points to 3%; the five-year expectation slightly decreased from 2.7% to 2.6%. Although expectations for all timeframes remain above the Federal Reserve's 2% annual inflation target, the data reflects a positive shift in consumer sentiment, alleviating the widespread panic previously triggered by Trump's tough rhetoric on tariffs.
On April 2, Trump announced a &#34;liberation day,&#34; proposing a 10% universal tariff on all U.S. imports and implementing &#34;reciprocal&#34; tariffs on dozens of countries. However, shortly thereafter, he retracted some of these measures and announced a 90-day negotiation window, which will end in July. This shift is considered one of the main factors behind the recent improvement in consumer expectations.
The New York Fed's survey is less volatile compared to those conducted by the University of Michigan or the Conference Board, providing a more stable perspective on inflation expectations. As Washington officials work to quell concerns about tariffs potentially triggering inflation, this report offers some breathing room for the White House.
Kevin Hassett, director of the White House National Economic Council, stated in an interview on Monday, &#34;Inflation has seen the most significant decline in four years, regardless of which inflation indicator you look at. While tariff revenues are rising, inflation is falling, which contradicts mainstream narratives but aligns perfectly with our expectations.&#34;
Data shows that the Fed's preferred core inflation indicator, the Personal Consumption Expenditures Price Index (PCE), recorded 2.1% in April, one of the lowest levels since February 2021; the core PCE, excluding food and energy, was at 2.5%, which is considered to better reflect long-term trends.
Consumer expectations for most price categories have also receded. Although food prices are expected to rise by 5.5% over the next year, an increase of 0.4 percentage points from last month and the highest since October 2023, expectations for gasoline price increases have significantly slowed to 2.7%, down 0.8 percentage points. Expectations for increases in medical costs, university tuition, and rent have also declined.
Positive signals have also emerged in the employment sector. The proportion of respondents expecting to be unemployed in the next 12 months has decreased to 14.8%, a month-on-month decline of 0.5 percentage points. Other economic areas are also showing optimistic sentiment. For example, the likelihood of missing minimum debt payments in the next three months has dropped to 13.4%, the lowest level since January this year.
Investment confidence has also rebounded. 36.3% of respondents expect the stock market to rise in a year, an increase of 0.6 percentage points from last month, indicating that consumer confidence is gradually recovering

According to the consumer expectations survey by the Federal Reserve Bank of New York, Americans' concerns about inflation have significantly eased, with inflation expectations for the next year dropping to 3.2%. The survey shows that consumer sentiment has improved following Trump's retraction of some tariff proposals. Although expectations remain above the Federal Reserve's 2% target, the data reflects a positive shift. The Director of the White House Council of Economic Advisers stated that inflation indicators show the most significant decline in four years, with core PCE recorded at 2.1% in April

- According to a survey by the New York Federal Reserve, concerns about inflation among Americans have significantly decreased following President Trump's retraction of some aggressive tariff proposals.  
- The survey indicates that inflation expectations for the next year dropped to 3.2%, with three-year expectations at 3% and five-year expectations slightly declining to 2.6%.  
- This shift in consumer sentiment is attributed to the easing of fears related to tariffs, providing the White House with some relief amid ongoing economic discussions.