US One-Year Inflation Expectations Jump to 3.9%, Highest Since May 2023

Short-term US inflation expectations surged to 3.9% in September, up from 3.6% the prior month, marking the highest reading since May 2023. According to the Federal Reserve Bank of New York's Survey of Consumer Expectations, three-year inflation expectations also edged higher to 3.3% from 3.2%, while five-year expectations held steady at 3.0%. The survey revealed elevated spending growth projections of 5.5% alongside a decline in expected earnings growth to 2.6%. The spike in near-term inflation outlooks strengthens arguments for keeping interest rates higher for longer, potentially pressuring equities.