NY Fed 1-Yr Inflation Expectations 3.17 vs 3.26% Prior
(Updated - June 10, 2024 11:02 AM EDT)
NY Fed 1-Yr Inflation Expectations 3.17 vs 3.26% Prior
The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the May 2024 Survey of Consumer Expectations, which shows inflation expectations declined at the short-term horizon, remained unchanged at the medium-term horizon, and increased at the longer-term horizon. Labor market expectations were mixed. Households’ expectations for the stock market improved, reaching a three-year high. Households were also more optimistic about their financial situation a year from now.
The main findings from the May 2024 Survey are:
Inflation
- Median inflation expectations at the one-year horizon declined to 3.2% in May from 3.3% in April, were unchanged at the three-year horizon at 2.8%, and increased at the five-year horizon to 3.0% from 2.8%. The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) decreased at the one-year horizon, increased at the three-year horizon, and remained unchanged at the five-year horizon.
- Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—increased at the one- and three-year horizons and declined at the five-year horizon.
- Median home price growth expectations were unchanged at 3.3%.
- Median year-ahead expected price changes were unchanged for gas (at 4.8%), food (5.3%), and rent (9.1%). They increased by 0.4 percentage point for medical care, to 9.1%, and declined by 0.6 percentage point for the cost of a college education, to 8.4%.
Labor Market
- Median one-year-ahead expected earnings growth was unchanged at 2.7%, just below its 12-month trailing average of 2.8%.
- Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—increased to 38.6% from 37.2%, and is now above the 12-month trailing average of 37.8%.
- The mean perceived probability of losing one’s job in the next 12 months decreased by 2.7 percentage points to 12.4%, falling below the 12-month trailing average of 13.2%. The mean probability of leaving one’s job voluntarily in the next 12 months increased slightly, to 19.6% from 19.4%, remaining slightly above the 12-month trailing average of 18.9%.
- The mean perceived probability of finding a job if one’s current job was lost increased by 1.3 percentage points to 52.2%, after reaching the lowest level since April 2021 last month.
Household Finance
- Median expected growth in household income increased by 0.1 percentage point to 3.1%, remaining within the narrow range of 2.9% to 3.2% the series has maintained for the past year.
- Median household spending growth expectations declined by 0.2 percentage point to 5.0%. The series has moved within a narrow range of 5.0% to 5.2% since November 2023, remaining well above its February 2020 level of 3.1%.
- Perceptions of credit access compared to a year ago were largely unchanged, while expectations about future credit access deteriorated, with a larger share of respondents expecting tighter credit conditions a year from now, and a smaller share expecting easier conditions.
- The average perceived probability of missing a minimum debt payment over the next three months decreased by 0.9 percentage point to 12.0%, a level comparable to those prevailing just before the pandemic.
- The median expected year-ahead change in taxes at current income level declined by 0.4 percentage point to 3.9%.
- Median year-ahead expected growth in government debt decreased to 9.3% from 9.6%.
- The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months increased by 1.5 percentage points to 27.0%, the highest reading since November 2023.
- Perceptions about households’ current financial situations improved, with more respondents reporting being better off than a year ago and fewer respondents reporting being worse off. Year-ahead expectations also improved, with a smaller share of respondents expecting to be worse off and a larger share of respondents expecting to be better off a year from now. The share of respondents expecting to be financially the same or better off 12 months from now is 78.1%, the highest level since June 2021.
- The mean perceived probability that U.S. stock prices will be higher 12 months from now increased by 1.8 percentage points to 40.5%, the highest level since May 2021.