Fed Survey: Consumers’ Financial Outlook Improves


3/14/2017 7:57:00 PM

The Federal Reserve Bank of New York’s Survey of Consumer Expectations for February 2017 shows consumers expect income growth in the year ahead and a higher probability they will be able to make minimum debt payments.

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Consumers’ financial expectations, including their income and spending growth for the year ahead, improved in February, according to the Federal Reserve Bank of New York’s latest Survey of Consumer Expectations.

Of note, consumers’ average perceived probability of missing a minimum debt payment over the next three months dropped to its lowest reading in a year, according to a news release from the Fed. The probability declined from 14.9 percent in January to 12.1 percent in February. “The drop was broadbased across age, income, and education groups,” the Fed reports.

The average perceived probability of missing a minimum debt payment over the next three months increased from 14.3 percent in December to 14.9 percent in January, ACA International previously reported. The January result matches the three-year high percentage for missing a minimum debt payment reached in November 2016.

The February 2017 survey also shows consumers’ expectations on credit availability compared to a year ago and for the coming year.

“The perceived change in credit availability compared to a year ago and the year-ahead expected credit availability became less dispersed in February, with the share of households reporting no change in availability rising,” according to the Fed’s news release.

When asked if obtaining credit will be equally easy/hard a year from now, 46.87 percent of respondents in February said access to credit would be the same, compared to 44.85 percent who provided that response in January.

When asked if obtaining credit is equally easy/hard than a year ago, 51.77 percent of respondents in February said credit access is the same, compared to 47.03 percent who provided that response in January.

Household Spending and Income Expectations

The Fed also reports slight increases in consumers’ median expected household income growth and spending growth expectations.

For the year ahead, consumers’ expected household income growth increased from 2.6 percent in January to 2.8 percent in February.

The increase was most notable for higher-income (above $100,000) respondents, whose median expectation rose from 2.7 percent in January to 2.9 percent. Median household spending growth expectations also increased slightly from 3.1 percent in January to 3.2 percent [in February.]”

The Survey of Consumer Expectations is based on consumers’ expectations for overall inflation and how they expect prices for food, gas, housing and education to behave. It also shows consumers’ views on job prospects, earnings growth, and their expectations about future spending and access to credit.

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