Americans are feeling increasingly strained by their household finances, with consumer pessimism hitting a multi-year high. According to a report from the New York Fed released on Monday, more and more households are expressing concern, despite hopes for a smooth transition after ongoing inflation issues.
In May, 13.3% of U.S. households reported feeling “much worse off” financially compared to a year ago. That’s a notable rise of over 2 percentage points from April and the highest level since July 2022. Meanwhile, nearly 36% of Americans anticipate their financial situation will decline over the coming year, with less than 23% expecting improvement—the lowest optimism recorded since October 2022.
While inflation expectations have remained mostly stable, consumers predict significant price increases in the next year. They expect food prices to rise by 5.8% and rent to jump by 7.4%.
The Fed’s findings are echoed in its latest Beige Book, which compiles economic conditions across its 12 districts. It notes that prices are generally climbing at a moderate to strong rate, with most regions reporting higher inflation than previously indicated. Fuel-related costs stemming from the conflict in the Middle East have been identified as a key driver of inflation, affecting transportation, packaging, food, and fertilizer costs.
Concerns about the labor market have also grown. The survey revealed that confidence in securing a new job after a layoff has dropped to its lowest point since December 2025. Only 43.7% of workers believe they would find a replacement job if they lost their current one. The New York Fed highlighted that expectations for job security have worsened, with higher anticipated layoffs and diminished hiring prospects.
Despite this, the Bureau of Labor Statistics reported that 172,000 jobs were added in May, exceeding economists’ forecasts, and the unemployment rate remained stable at 4.3%.
Disturbingly, the 13.3% of households considering themselves “much worse off” is the highest since July 2022, and 36% expect their financial situation to worsen.
Lindsey Rosner, an investment head at Goldman Sachs Asset Management, referred to the May jobs report as a “payroll explosion.” She expressed a growing confidence that the Fed isn’t overly concerned about job market trends, focusing primarily on inflation. The course of the ongoing conflict will likely dictate the Fed’s future decisions, but for now, it appears to be holding steady.
Consumer Reports noted that over 12.6% of Americans believe they may miss a minimum debt payment within the next 90 days. This perception is especially prevalent among those with at least a high school education and individuals from households earning less than $100,000.
Retired Americans aged 60 and above, as well as workers earning under $50,000 a year, have also expressed more pessimism about spending growth in the near future.
