# Inflation Expectations Not what inflation *is* — what people *believe it will be*. Tracked three ways: the University of Michigan consumer survey (year-ahead and 5–10 year), the NY Fed's Survey of Consumer Expectations, and market-implied TIPS breakevens. Central banks obsess over expectations because they're partially self-fulfilling: workers who expect 5% inflation demand 5% raises, firms pre-emptively raise prices, and the expectation manufactures the reality. "Anchored expectations" is the entire ballgame of modern central banking. ## The partisan-perception machine Survey-based inflation expectations are now among the most partisan-polarized numbers in the entire dashboard — expectations swing by multiple percentage points based on which party holds the White House, with each side's expectations jumping the moment the other side wins. This makes the series a measure of *political identity* wearing the costume of an economic forecast, the same pathology documented on the [[Consumer Sentiment Index]] page. Market breakevens, which involve actual money, polarize far less — the gap between survey and market expectations is itself a useful propaganda detector. ## Latest reading *As of 2026-10-07 · refreshed monthly · the cross-indicator read lives at [[State of the US Economy]].* - **Michigan, September 2026 final:** year-ahead expectations **4.6%** (August 4.0%); long-run expectations **3.4%**. Sentiment fell to **48.1** (August 51.7). - **Conference Board confidence: 81.9** in September, down from 88.6 and the lowest since 2014. Mentions of prices, especially oil and gas, hit new highs. - **Businesses see it too.** The ISM prices index was **77.9** for manufacturing and **74.0** for services, the services reading the highest since July 2022. - **The expectations channel under strain.** Survey expectations are rising while the [[Federal Funds Rate]] is being *raised*. This is the test case for [[Expectations Channel]] and [[Fiscal Dominance]] arguments. - **Next:** Michigan October preliminary on **Oct 9**. *Sources:* [University of Michigan Surveys of Consumers](https://www.sca.isr.umich.edu/) · [Advisor Perspectives](https://www.advisorperspectives.com/dshort/updates/2026/09/25/consumer-sentiment-falls-again-in-september) · [Conference Board](https://www.conference-board.org/topics/consumer-confidence) · [Reuters via GV Wire](https://gvwire.com/2026/09/29/us-consumer-confidence-dives-to-more-than-12-year-low-in-september/) · [IndustryWeek on ISM manufacturing](https://www.industryweek.com/the-economy/news/55409073/september-ism-report-manufacturing-industry-extends-expansion-streak-for-ninth-consecutive-month) · [Reuters via Spokesman-Review on ISM services](https://www.spokesman.com/stories/2026/oct/05/us-services-sector-cools-in-september-price-pressu/) ### Earlier snapshot (June 2026) Michigan year-ahead expectations hit 4.8% in May 2026 (up from 4.7%), driven by the [[Iran War 2026]] oil shock layered on tariff pass-through, with 57% of consumers spontaneously citing high prices as eroding their finances. Sentiment sits at record lows. The new [[Kevin Warsh]] Fed inherits the classic nightmare configuration: rising expectations + a president demanding rate cuts. ## See Also - [[Consumer Sentiment Index]] — the host survey and its partisan gap - [[Consumer Price Index]] — realized inflation - [[Federal Funds Rate]] — the anchoring instrument