Fortune: consumers doubt long-term inflation relief

Fortune’s May 23 report focused on a problem central banks watch closely: whether households still believe inflation will come back down over time. The immediate trigger was new University of Michigan survey data showing consumers lifting both short-run and long-run inflation expectations in May. That move matters because Federal Reserve officials have long said inflation expectations can influence actual pricing and wage behavior. The latest readings arrived as other recent data showed headline inflation pressure tied in part to higher energy costs. ### Which survey showed the clearest deterioration? The University of Michigan’s May survey showed year-ahead inflation expectations rising to 4.8% from 4.7% a month earlier, while long-run expectations climbed to 3.9% from 3.5%, according to the survey website. The survey said the May increase in long-run expectations was “notably higher” than the 2.8% to 3.2% range seen in 2024. May 22 data posted by the University of Michigan also showed consumer sentiment at 49.8, current economic conditions at 52.5, and the index of consumer expectations at 48.1. The survey said consumers appeared worried that inflation would “increase and proliferate beyond fuel prices, even in the long run.” ### Didn’t the New York Fed say longer-term expectations were stable? The New York Fed said on May 7 that its April Survey of Consumer Expectations showed median one-year inflation expectations rising to 3.6% from 3.4%, while three-year expectations held at 3.1% and five-year expectations held at 3.0%. (sca.isr.umich.edu) That means the New York Fed’s monthly survey did not show the same deterioration at longer horizons that appeared in the University of Michigan’s May reading. (data.sca.isr.umich.edu) April data from the New York Fed also showed households growing more uneasy on other fronts. The bank said mean unemployment expectations rose to 43.9%, the highest since April 2025, and the share of households expecting a worse financial situation a year ahead reached its highest level since April 2025. ### Why do policymakers care about long-run expectations so much? Federal Reserve officials track long-run expectations because they want the public to keep believing inflation will return near the central bank’s target over time. (newyorkfed.org) When those expectations rise, policymakers worry that workers and businesses could begin acting as if higher inflation will persist, making inflation harder to bring down. That concern is reflected in the Michigan survey’s own characterization that price worries were spreading beyond gasoline. (newyorkfed.org) Fortune framed that risk as a potential “inflation nightmare” for the Fed in its May 23 article by Jason Ma. The magazine said consumers were losing faith in long-term price relief and linked that shift to broader concern that energy-driven inflation could spread. ### Are these expectations being driven only by gasoline and the Iran conflict? The University of Michigan said year-ahead expectations remained far above the 3.4% reading seen in February 2026, before the Iran conflict, and above all 2024 readings. (sca.isr.umich.edu) Its May materials also highlighted a chart titled “Short-Run Expectations Worsened Since Feb 2026, Long-Run Expectations Following Suit.” The New York Fed’s April survey, by contrast, said gas price growth expectations fell sharply to 5.1% after a March spike, even as one-year inflation expectations moved higher. (fortune.com) That split suggests consumers may be responding to more than fuel alone, though the surveys use different methods and time windows. ### What should readers watch next? The New York Fed’s calendar shows its last Survey of Consumer Expectations release was published on May 7, 2026, covering April data. (sca.isr.umich.edu) The University of Michigan has already posted its May results, and the next set of monthly inflation-expectations readings from both surveys will show whether the May jump in long-run expectations persists. (newyorkfed.org 1) (newyorkfed.org 2)