Breaking: Inflation Expectations Rise Slightly, Labor Market Outlook Weakens – Survey of Consumer Expectations
New York, NY – October 26, 2023 – short-term inflation expectations edged higher in September, while consumer sentiment regarding the labor market deteriorated, according to the latest data released from the Federal Reserve Bank of New York’s Survey of Consumer Expectations (SCE). The survey, which tracks a panel of approximately 1,200 household heads, provides a key gauge of how Americans view the economic future.
The survey revealed the median expected growth in household income remained steady at 2.9% in september, matching the trailing 12-month average. However, expectations for household spending growth declined slightly, falling 0.3 percentage points to 4.7%, below the 12-month average of 4.9%.
On the inflation front, the mean perceived probability that the average interest rate on saving accounts will be higher in 12 months increased by 0.6 percentage point to 24.9%. Median expectations for year-ahead tax changes at current income levels rose by 0.2 percentage point to 3.6%, while expectations regarding year-ahead growth in government debt increased more considerably, up 0.9 percentage points to 7.5%.
A notable shift was observed in perceptions of personal finances. While more respondents reported their households were better off compared to a year ago,expectations for future financial situations softened,with fewer anticipating enhancement over the next 12 months.
The labor market outlook also showed signs of weakening. While credit access perceptions remained largely unchanged, expectations for future credit availability improved marginally. Though, the average perceived probability of missing a minimum debt payment over the next three months decreased by 0.5 percentage point to 12.6%, remaining below the 12-month average of 13.5%.
optimism regarding the stock market increased, with the mean perceived probability that U.S. stock prices will be higher 12 months from now rising by 0.9 percentage points to 39.8%, exceeding the 12-month average of 38.0%.
The SCE is a nationally representative, internet-based survey utilizing a rotating panel, allowing researchers to track individual consumer expectations over time. Detailed information about the survey methodology, FAQs, a chart guide, and the questionnaire are available on the New York Fed’s website: https://www.newyorkfed.org/medialibrary/media/research/epr/2017/epr_2017_survey-consumer-expectations_armantier.pdf, https://www.newyorkfed.org/microeconomics/sce/sce-faq, https://www.newyorkfed.org/medialibrary/interactives/sce/sce/downloads/glossary/frbny-sce-chartglossary.pdf, and https://www.newyorkfed.org/medialibrary/interactives/sce/sce/downloads/data/frbny-sce-survey-core-module-public-questionnaire.pdf.
