Consumer Economic & Housing Expectations a Mixed Bag, Survey Shows

The latest Survey of Consumer Expectations (SCE) from the Federal Reserve Bank of New York offers a mixed bag regarding the coming few years. While consumers anticipate a better labor market to come, they were mixed about inflation, depending on how deeply into the crystal ball they look.

According to the SCE, released Monday, median inflation expectations over the coming three-year period has dipped to 2.8 percent, the lowest level since the inception of the survey in 2013. However, in contrast, median inflation expectations one year out rose (also to 2.8 percent), though that number remains at the low end of the range observed over the past two years.

Consumers also expect median home prices overall to remain essentially unchanged though, respondents aged over 60 are less enthusiastic that younger respondents. At the same time, median household income expectations fell sharply, from 2.8 percent to 2.3 percent, the largest one-month drop on record. According to the SCE, income expectations are now back to levels seen in the first half of 2014.

On the upside, fewer respondents said they believe they’ll lose their jobs in the next year. The mean perceived probability of losing one’s job over the next 12 months dropped from 14.6 percent to 12.7 percent, the lowest level recorded. Meanwhile, the mean perceived probability of finding a new job in three months, in the event a respondent should lose a job, remained unchanged at 54.8 percent.

A notable upswing in consumer expectations occurred in the household finance area. After declining for the past three months, median household spending expectations rebounded from 3.2 percent to 3.5 percent. The increase, according to the SCE, is general across demographic groups except for respondents younger than 40. Their expectations dropped slightly.

Meanwhile, perceptions of credit availability compared to one year ago remained essentially unchanged, while expectations about credit availability throughout 2016 improved slightly. The average perceived probability of a higher year-ahead interest rate on savings accounts decreased slightly to 30.3 percent, “driven mostly by respondents with higher education, higher income, and higher numeracy skills,” the report stated.