Year-ahead expectations for inflation and price increases on goods and services continue to decline, according to new findings from the Fed’s Center for Microeconomic Data.
04/17/2023 3:10 P.M.
2.5 minute rad
The Federal Reserve Bank of New York’s Center for Microeconomic Data recently released the March 2023 Survey of Consumer Expectations, which shows that inflation expectations increased at the short-term and medium-term horizons, but decreased slightly at the longer-term horizon.
Additionally, expectations about year-ahead price increases for gas, food, cost of rent and medical care all continued to decline, while expectations for the cost of college education increased. Home price growth expectations rose but remain below pre-pandemic levels. Credit access perceptions and expectations deteriorated.
Additional findings from the survey include:
- “Median home price growth expectations increased by 0.4 percentage point to 1.8% in March, remaining far below the 12-month trailing average of 3% as well as their pre-pandemic levels. The increase was most pronounced among respondents with no more than a high school education and for those who live in the Midwest Census region.
- Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—increased by 1.3 percentage point to 40.7%. The increase was more pronounced for respondents with at least some college education, those between the ages of 40 and 60, and those with annual household incomes between $50k and $100k.
- The mean perceived probability of losing one’s job in the next 12 months decreased by 0.4 percentage point to 11.4%. The mean probability of leaving one’s job voluntarily in the next 12 months also declined by 1.5 percentage point to 19.3%.
- The mean perceived probability of finding a job (if one’s current job was lost) declined by 0.3 percentage point to 57.6% in March. The series has been moving between a narrow range of 57.2% to 58.2% since August 2022.
- Median expected growth in household income increased by 0.1 percentage point to 3.3%. Median household spending growth expectations increased to 5.7% in March from 5.6% in February. This is the first increase in the series since October 2022.
- Perceptions of credit access compared to a year ago deteriorated in March, with the share of households reporting it is harder to obtain credit than one year ago rising and reaching a series high. Respondents were more pessimistic about future credit availability as well, with the share of households expecting it will be harder to obtain credit a year from now also rising.
- Median year-ahead expected growth in government debt declined by 0.3 percentage point to 9.9%. This is the lowest reading of the series since February 2020.
- The mean perceived probability that U.S. stock prices will be higher 12 months from now decreased by 1.4 percentage point to 35.0%.”
The SCE is a nationally representative, internet-based survey of a rotating panel of approximately 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.
Access the survey report here.
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