US DATA: Inflation, Job Concerns Ease In NY Fed Survey But Remain Elevated

The NY Fed's January Survey of Consumer Expectations (SCE) showed largely steady findings from recent months, if anything showing a stabilization in already-weak labor market sentiment with a further pullback in near-term inflation expectations. Judging from the survey, consumers' 1-year inflation fears have faded, but concerns over the labor market have not.

• The inflation expectations gauges showed a drop in 1Y to 3.09% (3.42% prior) vs analysts' expectation of a steady figure (unrounded),  and a 6-month low. 3Y (2.98%) and 5Y (3.00%) were essentially unchanged; 3Y has basically been at this level since the end of 2024 with the exception of a jump to 3.17% in April 2025 (tariff "Liberation Day").
• This is a relatively important survey for FOMC members who hold it in higher regard than various alternative inflation surveys, but most are consistent with diminishing near-term consumer inflation concerns (including UMIch's Feb drop to a 13-month low in 1Y expectations; Conference Board remains an outlier to the upside through January).  
• The longer-term gauges are relatively consistent with previous periods in which actual PCE/CPI was at target but overall the inflation gauges are on the higher side of the overall historical series.
• On the labor market front, there was mixed news: "Mean probability that U.S. unemployment rate will be higher one year from now" ticked very slightly up from December (41.9% from 41.8%), which is below the late-2025 and Mar/Apr 2025 highs (again, tariff uncertainty-related) but still very elevated on a historic basis.
• And the mean perceived probability of finding a job within 3 months ticked up to 45.67% from December's all-time low 43.1%. But like other consumer survey indicators such as the Conference Board's labor differential, this remains consistent with a continued rise in the unemployment rate over time.