Every month I wait for this particular survey the way some people wait for their favorite team’s injury report. Because when regular Americans – not Wall Street traders – tell you what they expect to pay for rent, gas, or a trip to the doctor, that’s usually a better predictor of the future than any Ivy League model.
And the November numbers that just dropped? They’re the definition of mixed signals.
The Headline Everyone Wants to Hear (And Mostly Did)
Let’s start with the part that made markets breathe a sigh of relief: median one-year inflation expectations barely budged, slipping from 3.24% to 3.2%. Three-year and five-year expectations stayed glued at 3.0%.
In a world where the Federal Reserve is trying to thread the needle between crushing inflation and crushing the economy, “steady” is basically a love letter. Bond yields dipped a few basis points on the news, stocks shrugged, and the narrative of an impending soft landing stayed alive.
But dig one layer deeper and the story changes tone pretty fast.
The One Number That Actually Made Me Sit Up Straight
Expected cost increases for medical care rocketed to 10.1% over the next twelve months – the highest reading since the series began in 2014.
Ten. Point. One.
That’s not a rounding error. That’s not “supply-chain issues working their way through the system.” That’s the kind of jump that forces families to choose between filling a prescription and filling the fridge.
When everyday people suddenly expect double-digit price increases in something as non-negotiable as healthcare, you’re looking at a serious erosion of purchasing power – no matter what the aggregate CPI print says next month.
And medical care wasn’t alone. Rent expectations climbed to 8.3%, college tuition to 8.4%, food to 5.9%, and gasoline to 4.1%. Every single necessity category moved higher.
The Labor Market: Optimism Returns (Sort Of)
On the brighter side, Americans are feeling a bit more secure about jobs. The perceived probability of losing one’s job dropped to 13.8% – the lowest all year. The odds of finding a new job if laid off also improved noticeably.
That’s genuinely good news. A resilient labor market is the Fed’s golden ticket to engineering the fabled soft landing.
Yet even here there’s a catch: voluntary quitting intentions fell to the lowest since February. In plain English, people aren’t confident enough to jump ship for something better. They’re hanging on to what they have. That’s stability, sure – but it’s the kind of stability that comes from caution, not strength.
Households Are Feeling the Squeeze – Hard
Perhaps the most telling part of the survey is the sharp deterioration in how people view their current financial situation.
Nearly 39% of respondents said their household is worse off than a year ago – the highest in two years. The share saying they’re better off continues to shrink.
- 38.9% now report being financially worse off year-over-year
>Only 22.1% say they’re better off (down steadily)
>Future expectations also darkened – fewer people expect to be better off in 12 months
I’ve been reading these reports for years, and that 39% figure stands out. It’s the same neighborhood we saw in late 2022 when inflation was screaming hot and real wages were falling off a cliff.
Other Notable (and Slightly Worrying) Details
Expected household spending growth rose to 5.0% – meaning people know they’ll have to shell out more just to maintain their current lifestyle.
Perceptions of credit access worsened again, and the probability of missing a minimum debt payment ticked up to 13.7%. Not catastrophic, but definitely moving in the wrong direction.
Expected tax burden at current income? Up to 4.1%, the highest since summer. Expected government debt growth? A whopping 9.2% median forecast.
And in a small but symbolic shift, the perceived probability that savings account rates will be higher in 12 months fell to 24.1%. People are starting to believe the rate-hike cycle really is over.
What Does This All Mean for Markets and Policy?
In my view – and I’ve been wrong before – this survey is flashing yellow, not red, but definitely not green either.
The bond market is currently pricing in roughly three Fed cuts for 2025, and the “steady” headline inflation expectations give policymakers room to ease if labor data softens.
But if medical costs, rent, and food keep accelerating in the real world while wages grow at only 2.6% (unchanged in the survey), the lived experience of inflation is going to feel a lot stickier than the official numbers suggest.
That’s a political problem as much as an economic one. Central banks can ignore Wall Street chatter, but they can’t ignore voters who feel poorer every grocery run.
The Bottom Line
The American consumer is sending two messages at once:
- “We think overall inflation will stay moderate,” and
- “But the stuff we actually need to survive is getting brutally expensive, and we’re starting to hurt.”
History says when those two narratives diverge for too long, it’s the second one that wins.
So while markets celebrate “stable expectations,” families are quietly bracing for another year of trade-offs, skipped doctor visits, and side hustles, and credit-card balances that never quite go down.
If I had to bet, I’d say the soft-landing crowd still has the edge – but the runway is getting shorter, and the crosswinds are picking up.
Stay vigilant out there. The numbers on the screen and the numbers in your bank account aren’t always telling the same story.
