Fear of inflation fell in May: New York Federal Reserve survey

Americans' fear of inflation fell in May, according to a New York Federal Reserve survey released Monday.

The Fed's Survey of Consumer Expectations showed that the one-year inflation outlook decreased a 0.4 percentage point, down to 3.2%, from April, CNBC reported. The three-year inflation forecast fell 0.2 percentage point to 3%, and the five-year outlook went from 2.6% to 2.7%.

The inflation outlooks are still above the Fed's 2% annual target, but they show a change from the fearful attitude that followed President Trump's tariffs in April.

On April 2, Trump announced "liberation day," in which  universal 10% tariffs were implemented on all U.S. imports along with so-called reciprocal duties on dozens of nations. He paused the reciprocal tariffs for 90 days, which ends in July.

“By every measure of inflation, it’s down by more than it’s been in more than four years,” National Economic Council Director Kevin Hassett told CNBC on Monday. “While the tariff revenue has been going up, inflation has been coming down, which is contrary to the story that everybody else has been saying, but very consistent with what we’ve been saying.”

The Fed measured inflation at 2.1% in April via its preferred personal consumption expenditures price index, which was the lowest it has been since February 2021.