Recent data from the New York Federal Reserve offers a glimmer of hope amidst previous economic uncertainty. A noticeable shift in consumer sentiment regarding inflation and the job market appears linked to a stabilization in trade policy.

Following President Trump’s April 2nd tariff announcements, which significantly disrupted international trade, business and consumer confidence took a hit. Concerns surrounding prices, employment, and the overall economic outlook were widespread.

However, a significant trade agreement with the United Kingdom, coupled with a 90-day tariff pause concerning China, seems to have calmed these anxieties. The New York Fed’s May Survey of Consumer Expectations reveals a positive trend.

The one-year inflation outlook dropped to a three-month low of 3.2 percent in May, down from 3.6 percent in April. This suggests a decrease in consumer worries about rising prices. Further reinforcing this positive shift, three-year and five-year inflation expectations also fell, reaching 3 percent and 2.6 percent respectively.

This data suggests a potential turning point, indicating that stabilized trade relations may be contributing to improved consumer confidence and a more positive outlook on the job market. The coming months will be crucial in determining the sustainability of this positive trend.