Households in the New York Fed's October survey expected their earnings to grow 2.6 per cent over the next year and prices to rise 3.9 per cent. That shortfall of 1.3 points is the widest since April 2023, by our reading of the survey's published data.
Neither number moved from September. The Survey of Consumer Expectations, released by the Federal Reserve Bank of New York on Monday, found median inflation expectations unchanged at 3.9 per cent one year ahead, 3.3 per cent three years ahead and 3.0 per cent five years ahead. Median expected earnings growth held at 2.6 per cent. The survey asks a rotating panel of about 1,300 household heads, and this round was taken from 1 to 31 October.
How unusual is a 1.3-point gap?
It is unusual outside the 2021 to 2023 inflation surge. We subtracted median expected inflation from median expected earnings growth for every month in the bank's chart data, which starts in June 2013. Respondents nearly always expect prices to outrun their pay a little: the gap was negative in 153 of the 161 months. The size of the gap is what changes.
| Month | Expected inflation | Expected earnings growth | Gap (points) |
|---|---|---|---|
| June 2013 to Dec 2019 average | -0.5 | ||
| June 2022 (widest on record) | 6.8% | 3.0% | -3.8 |
| April 2023 | 4.4% | 3.0% | -1.5 |
| October 2025 | 3.2% | 2.6% | -0.6 |
| September 2026 | 3.9% | 2.6% | -1.3 |
| October 2026 | 3.9% | 2.6% | -1.3 |
Medians from the New York Fed's Survey of Consumer Expectations; gaps are this publication's arithmetic, from unrounded series.
A year ago the gap was 0.6 points, close to its pre-pandemic norm. It has widened because expected inflation has risen by more than half a point since then, while expected pay has not moved. The survey is about expectations, not outcomes, but the two have been pointing the same way. Wages rose 3.1 per cent in the year to September, 0.6 points less than prices.
Who expects to fall furthest behind?
Lower-income households, by a wide margin. Among respondents with household incomes under $50,000, median expected inflation in October was 4.4 per cent and median expected earnings growth 1 per cent, according to the survey's demographic tables. Among those earning more than $100,000, the figures were 3.75 per cent and 3 per cent.
Those subgroup medians come from smaller samples and tend to settle on whole numbers, so a single month should be read with care. The direction is not in doubt. A year ago, the under-$50,000 group expected 1.8 per cent earnings growth against 3.1 per cent inflation. Both numbers have since moved the wrong way for them.
Why are unemployment fears rising when unemployment is falling?
The survey does not say, and the data cannot settle it. What it shows is that the average probability respondents give to U.S. unemployment being higher a year from now rose 1.4 points to 45.3 per cent, the highest since April 2020. The New York Fed said the increase was driven by people without a college degree.
That came three days after the Bureau of Labor Statistics reported that employers added 165,000 jobs in October and the unemployment rate fell to 4.1 per cent, as we reported on Monday. The survey was in the field before that report came out.
Our split by education shows how the worry has spread. Among respondents with a high school education or less, the probability rose to 38.6 per cent from 33.4 per cent a year earlier. Among those with some college, it rose to 44.6 per cent from 40.6 per cent. College graduates remain the most pessimistic, at 51.1 per cent, but that is down from 53.4 per cent in October 2025.
Personal job prospects look less grim than the national picture. The average expected chance of losing one's own job in the next 12 months rose 0.4 points to 13.9 per cent, still below its 12-month average of 14.3 per cent. The expected chance of finding a job after losing one rose to 46.5 per cent, the highest since November 2025.
What else moved?
Expected rent increases jumped 0.9 points to 7.7 per cent, the biggest change among the price expectations in the release. Expected price rises for medical care reached 9.3 per cent and for college 7.6 per cent, while the expected rise in gasoline prices fell 0.6 points to 4.2 per cent.
The average probability of missing a minimum debt payment in the next three months rose 1.6 points to 13.8 per cent, its highest since December 2025. Median expected growth in household income slipped to 3.0 per cent, while expected spending growth was 5.3 per cent. Households, in other words, expect to spend faster than their incomes grow. That has been true in 156 of the survey's 161 months, by our count, but it sits uneasily beside rising expectations of missed payments.
The Fed held its policy rate at 3.75 to 4 per cent on 28 October, with two officials voting for a hike. The next readings that will test these expectations are the October consumer price index from the Bureau of Labor Statistics and the New York Fed's November survey, which on its usual schedule would be published in early December.
All survey findings, including inflation, earnings, unemployment, job-loss, job-finding, quit, delinquency, income, spending and price expectations, the survey dates and the panel size, are from the Federal Reserve Bank of New York's press release of 9 November 2026 and its Survey of Consumer Expectations chart data, downloaded on 10 November 2026. October payrolls and the 4.1 per cent unemployment rate are from the Bureau of Labor Statistics release of 6 November 2026. The gap between expected earnings and expected inflation, its history and averages, and the breakdowns by income and education are this publication's arithmetic from the published series. The analysis is our own.
Topics moneywagesunemploymenthousehold financeconsumer sentiment
