According to the Federal Reserve Bank of New York’s September 2022 survey, inflation expectations declined in the short term, but will increase in the long term.
10/14/2022 2:15 P.M.
3 minute read
The September 2022 Survey of Consumer Expectations (SCE) report from the Federal Reserve Bank of New York’s Center for Microeconomic Data reveals that inflation expectations have continued to decline in the short term, but slightly increased in the medium and longer terms.
Other findings include a sharp decline in household spending expectations, marking a record low since the New York Fed’s series’ inception in June 2013. The survey also shows that home price growth expectations continued to decline in September and are now the lowest they’ve been since June 2020, and household expectations about future credit access have slightly improved from a year ago.
Here are some key findings regarding inflation, the labor market and household finance:
Inflation
- Median one-year-ahead inflation expectations continued to decline in September, falling by 0.3 percentage points to 5.4%, its lowest reading since September 2021. In contrast, three-year-ahead inflation expectations rose slightly to 2.9% from 2.8% in August.
- Median five-year-ahead inflation expectations, which have been elicited in the monthly SCE core survey on an ad-hoc basis since the beginning of this year and were first published in July 2022, increased by 0.2 percentage point to 2.2%.
- Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—decreased for the short-term and was unchanged at the medium-term benchmark.
Labor Market
- Median one-year-ahead expected earnings growth fell by 0.1 percentage points to 2.9% in September. The decline was most pronounced for respondents over the age of 60 and those with a high-school education or less.
- Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—decreased by 0.9 percentage points to 39.1%.
- The mean perceived probability of losing one’s job in the next 12 months increased by 0.5 percentage points to 11.6%. Similarly, the mean probability of leaving one’s job voluntarily in the next 12 months increased by 0.9 percentage points to 19.4%. Both increases were most pronounced for those over the age of 60.
- The mean perceived probability of finding a job (if one’s current job was lost) increased by 0.1 percentage points to 57.3%.
Household Finance
- The median expected growth in household income was unchanged in September from its series high of 3.5%.
- Median household spending growth expectations fell sharply to 6% from 7.8% in August, its steepest one-month decline since the series’ inception in June 2013, and its lowest reading since January of this year. The decline was broad based across demographic groups.
- Perceptions about households’ current financial situations compared to a year ago were roughly unchanged, but the share of households reporting a worse situation compared to a year ago remains close to its series high. Year-ahead expectations about households’ financial situations were also roughly unchanged in September.
The report is based on data from the New York Fed’s Survey of Consumer Expectations, a nationally representative online survey conducted by a rotating panel of over 1,300 household heads. Respondents participate in the panel for up to 12 months, with a roughly equal number rotating in and out of the panel each month.
Read more findings from the report here.
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