Consumers’ Spending Expectations Drop After Improvement in September
11/15/2016 2:00 PM
The Federal Reserve Bank of New York’s Survey of Consumer Expectations also shows a decline in consumers’ outlook on credit availability in the year ahead.
Consumers’ expectations for household spending growth reverted in October after an increase in September, according to the Federal Reserve Bank of New York’s latest Survey of Consumer Expectations.
The Fed reports in a news release that the spending expectations results for October are the most notable change in the survey.
The spending expectations for the year ahead increased from 3.3 percent in August to 3.7 percent in September and declined to 3.2 percent in October, according to the Fed.
“The series has been volatile, but the current reading is below the average since the beginning of the year of 3.5 percent,” it reports.
The survey also shows a decline in consumers’ outlook on credit availability and little change in their expectations for missing debt payments over the next three months.
“The perceived change in credit availability compared to a year ago and, in particular, the year-ahead expected credit availability both deteriorated somewhat in October,” the Fed reports.
In October, when asked if obtaining credit was “much easier, somewhat easier, equally easy/hard, somewhat harder” or “much harder” than it was a year ago, 8.16 percent said it would be much harder to obtain credit now, compared to 7.51 percent who gave that answer in August.
When asked the same question for a year from now, 7.59 percent of respondents said it would be much harder to obtain credit, compared to 6.71 percent who gave that answer in September.
The percentage who said it would be “much easier” to obtain credit a year from now did increase from 1.28 percent in September to 1.63 percent in October, while those who said it would be “somewhat easier” declined from 16.71 percent to 14.20 percent. About 27 percent of respondents in October said it would be somewhat harder to obtain credit a year from now compared to 24.56 percent in September, according to the survey.
“The average perceived probability of missing a minimum debt payment over the next three months was essentially unchanged at 14.4 percent, remaining well above its average for the past two years,” the Fed reports.
The probability of missing a minimum debt payment increased from 13.9 percent in August to 14.5 percent in September.
The probability was 14.3 percent in November 2014 and 12.84 percent in November 2015. It declined to 12.33 percent in December 2015 and to between 11.78 and 11.45 percent in January through March 2016 before starting to increase again, according to the survey.
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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