On paper, the economy looks fine. Jobs are growing, the jobless rate is low, and last month's hiring beat what experts expected.
But try telling that to the people living in it. They feel worse about their money than at any point since 2022.
The gloom shows up in a New York Fed survey, out Monday, that asks people how they feel about their money. The share who say they're "much worse off" than a year ago jumped to 13.3% in May.
That's the highest since July 2022. The outlook isn't much brighter, either.
About 36% expect their money to get worse over the next year, while fewer than 23% expect it to get better. That gap is the most downbeat since October 2022.
The worry isn't spread evenly. More than 1 in 8 people now fear they may miss a debt payment soon, and that fear is heaviest in homes earning under $100,000.
Retirees over 60 and workers earning under $50,000 also expect to spend less. Layoff worries crept up too, the Fed said.
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Dig into the worry, and it comes down to the basics. Over the next year, people expect food prices to climb 5.8% and rent to jump 7.4%.
A lot of that traces back to the war. The Fed's own business survey pinned energy costs as the main driver, and those costs tie back to the Middle East fight.
The pain is spreading into shipping, packaging, and groceries. Even fertilizer got pricier, which feeds back into food costs later.
The war isn't just a headline anymore, since it's showing up on the grocery receipt. When it costs more to move and pack goods, that bill lands on shoppers in the end.
These are guesses about the year ahead, but they shape how people spend today.
The strange part is that the job market doesn't back up the fear. Employers added 172,000 jobs in May, which topped forecasts, and the jobless rate held at 4.3%.
But confidence is cracking anyway. Workers were asked if they could find a new job if they lost theirs, and the share who said yes fell to its lowest since December 2025.
Only about 44% felt sure they could. That split puts the new Fed in a tough spot.
Strong job numbers argue against cutting rates, while gloomy households beg for relief. For now, the safe move looks like no move at all.
A Goldman Sachs bond investor summed it up after the jobs report. The Fed no longer needs to fear the job market, so the next move comes down to how long the war lasts.
The job market is holding up. People just don't believe it will last.
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