Fears Regarding Access to Credit Reach the Highest Level in Over a Decade, New York Fed Survey Reveals

American consumers are expressing growing concerns about their ability to access credit due to the continued rise in interest rates and stricter lending standards at banks, as per a recent survey released by the New York Federal Reserve on Monday.

According to respondents, the ease of obtaining loans, credit cards, and mortgages has become more challenging over the past year, with nearly 60% reporting this sentiment. This marks the highest level of apprehension recorded in a data series dating back to June 2013. These findings were part of the New York Fed’s Survey of Consumer Expectations for August.

These concerns regarding credit access have been on the rise since early 2022, coinciding with the Federal Reserve's decision to incrementally increase interest rates. Since March of the previous year, the central bank has raised its key borrowing rate 11 times, totaling an increase of 5.25 percentage points, in an effort to combat inflation.

While the Federal Reserve remains concerned about rising prices, the outlook for inflation varies.

Expectations for inflation over the next one year and five years increased by a mere 0.1 percentage point each during the month, bringing them to 3.6% and 3%, respectively. The three-year inflation outlook decreased by 0.1 point to 2.8%. The Federal Reserve targets an inflation rate of 2%.

However, expectations regarding commodity inflation show a different trend.

According to the survey, respondents expect gas prices to increase by 0.4 percentage points to 4.9%, medical care costs to rise by 0.8 points to 9.2%, food prices to increase by 0.1 point to 5.3%, and both college education and rent costs to rise by 0.2 points each, to 8.2% and 9.2%, respectively.

Concerns are also mounting about employment prospects. The survey indicates that the mean expectation of losing one's job in the next year has risen by 2 percentage points to 13.8%, the highest level since April 2021. This increase comes despite the unemployment rate standing at just 3.8%, which is only 0.1 percentage point higher than its level from a year ago."