New York Fed survey: Trump tariff threat eased significantly, concerns about May inflation have significantly subsided.

According to a survey report released by the New York Federal Reserve on Monday, as President Trump temporarily postponed the implementation of some extreme tariff proposals, Americans' inflation concerns in May have significantly eased. The central bank survey report shows that consumers' one-year inflation expectations have fallen sharply to 3.2%, a decrease of 0.4 percentage points from April. Three-year inflation expectations have dropped 0.2 percentage points to 3%, while five-year expectations have slightly decreased from 2.7% to 2.6%. Although these three indicators are still above the Federal Reserve's 2% annual inflation target, they show a positive trend, reflecting the diminishing fears of a trade war sparked by President Trump's tariff announcement on April 2. Trump initially announced a 10% tariff on all imported goods and imposed so-called "reciprocal tariffs" on dozens of countries. However, the government quickly adjusted its strategy and set a 90-day negotiation window for the latter, which will expire in July. Compared to the volatility data from institutions such as the University of Michigan and the Business Roundtable, the New York Fed's survey has brought rare good news to the White House. Current government officials are working hard to dispel public concerns about tariffs leading to higher inflation. "All inflation indicators show the largest decline in over four years," said Kevin Hassett, Chairman of the White House Council of Economic Advisers, on Monday. "Despite the continuous increase in tariff revenue, the inflation level is decreasing - this contradicts the mainstream argument but fully confirms our prediction." The Federal Reserve's core inflation indicator - the Personal Consumption Expenditures Price Index (CPI) - rose by 2.1% year-on-year in April, reaching a new low since February 2021. The core PCE index, excluding food and energy, stood at 2.5%, a more reliable measure of long-term inflation trends according to Fed officials. The survey also shows that the majority of expectations for prices of goods are trending downwards, but respondents expect food prices to rise by 5.5% in the next year, an increase of 0.4 percentage points from May and a new high since October 2023. On the other hand, expectations for gasoline price increases have decreased by 0.8 percentage points to 2.7%. Expectations for monthly increases in medical expenses, college education costs, and rent have also decreased simultaneously. Expectations for the job market have also improved, with the expected unemployment risk in the next 12 months dropping by 0.5 percentage points to 14.8%. Other positive signals include: the probability of debt defaults in the next three months decreasing by 0.5 percentage points to 13.4%, the lowest since January; and the stock market confidence index rising by 0.6 percentage points, with 36.3% of respondents optimistic about the stock market performance in the next year.