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Consumers Show Mixed Economic Outlook, Survey Finds

housing-forecastConsumer expectations for the housing market are showing a mixed outlook for the U.S. economy, according to the Federal Reserve Bank of New York’s Center for Microeconomic Data August 2015 Survey of Consumer Expectations (SCE) released Tuesday.

The SCE contains information about how consumers expect overall inflation and prices for housing, food, gas, and education to behave. It also provides insight into Americans’ views about job prospects and earnings growth and their expectations about future spending and access to credit.

The survey data found that both the perceived change and the year-ahead credit availability expectations were slightly more pessimistic in August, as a portion of survey respondents that believe credit is easier to obtain fell in both conditions.

The Zillow Mortgage Access Index (ZMAI) quarterly report released earlier this month found that access to mortgage credit tightened in the first quarter of 2015 and is almost unchanged from a year ago.

According to Zillow, in a survey earlier this summer of more than 100 economists and housing experts, more than 60 percent said they expect mortgage regulations to loosen further, with many expressing concern the market will become too lax over the next year.

Access to mortgage credit has improved in Q1, reaching 65 and is over two-thirds of the way back to 2002 pre-crisis levels, Zillow says.

"Recent market volatility is causing some lenders to be more cautious in their underwriting," said Zillow Chief Economist Dr. Svenja Gudell. "Tighter mortgage access will make it harder for people with low credit scores to get a home loan, and even people who can get approved for a mortgage will have fewer options in terms of available mortgage products.

The survey data showed that the median expected home price change matched series lows in February 2015, declining slightly to 3.0 percent.

Median household income growth expectations for one-year ahead rose to 2.9 percent, which was the same as spring 2015 highs. The NY Fed credits much of this increase to those with a high school or less education and incomes in the $50,000 to $100,000 range.

Median year-ahead household spending growth expectations remained flat at 3.5 percent, the same as last month's all time low since the survey began. In addition, the expected median change in tax payments dropped to a new all-time low of a 2.7 percent increase.

nyfedIn terms of the labor market, the expected median one-year ahead earnings growth remained stable at 2.4 percent and have stayed flat for the most part since December 2014.

Job separation expectations also fell, with the probability of losing a job reaching a new low of 13.5 percent and the probability of leaving a job dropping from 22.0 percent to 20.8 percent.

However, the recent jobs report found that job gains fell below expectations for the month of August, totaling less than 200,000, but wage growth finally began to show some upward pressure. Analysts are still divided on whether it will be enough to convince the Federal Reserve to raise interest rates in their September meeting, however.

According to the August 2015 Employment Summary released by the Bureau of Labor Statistics (BLS) on Friday, nonfarm employment increased in August by 173,000, which is well below the monthly average for the previous 12 months of 247,000. The unemployment rate dropped to 5.1 percent while the number of unemployed persons in the nation fell below eight million. The unemployment rate and number of unemployed persons are down by 1 full percentage point and 1.5 million people, respectively, year-over-year in August.

While wage growth has been slow for the most part in recent months, average hourly earnings for all employees jumped by 8 cents in August up to $25.09, a year-over-year increase of 2.2 percent. This increase followed a gain of 6 cents in July. For non-supervisory employees, average hourly earnings increased by 5 cents in August up to $21.07.

The NY Fed also reported that median inflation expectations lowered from 3.0 to 2.8 percent at the one-year ahead mark, and fell from 3.0 to 2.9 percent at the three-year ahead mark.

Click here to view the Federal Reserve Bank of New York's August 2015 Survey of Consumer Expectations.

Photo courtesy of the Federal Reserve Bank of New York.

About Author: Xhevrije West

Xhevrije West is a writer and editor based in Dallas, Texas. She has worked for a number of publications including The Syracuse New Times, Dallas Flow Magazine, and Bellwethr Magazine. She completed her Bachelors at Alcorn State University and went on to complete her Masters at Syracuse University.
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