econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 10 September 2016

Consumer Surveys, Inflation Expectations And The FOMC

from the St Louis Fed

-- this post authored by William Dupor

Each of the past 12 Federal Open Market Committee (FOMC) statements referred to survey-based measures of inflation expectations. Examining past FOMC minutes, one can glean that these survey-based measures include survey responses by households and not solely those of professional forecasters.

The minutes of the June FOMC meeting, for example, cited one of the household-based measures: the one contained in the University of Michigan Surveys of Consumers.[1]

The attention paid to household inflation expectations surveys seems to represent a gradual change by U.S. monetary policymakers. In 2006, none of the FOMC minutes referred to the inflation responses from the University of Michigan survey.

It stands to reason that the usefulness of these inflation measures for policymaking depends at least somewhat on the quality of the measures. However, there exists evidence that many individuals from the overall U.S. population have distorted views of inflation. Some examples include:

  • In a Federal Reserve Bank of Boston study, only 66 percent of individuals surveyed chose the correct definition of inflation from four choices.[2]

  • A National Council of Economic Education survey, released in 2005, revealed that an important share of Americans do not understand inflation and its implications for the U.S. economy.[3]

  • A Federal Reserve Bank of Cleveland study, conducted between 1998 and 2001, asked individuals what the current inflation rate was. On average, the respondents thought inflation was around 6.0 percent. This was more than double the average U.S. inflation rate over this period.[4]

  • Similarly, a 2013 Business Insider survey reported that 39 percent of respondents said inflation was above 5 percent. It was around 1.5 percent at the time of the survey.[5]

The above evidence suggests that monetary policymakers may want to think hard about how they use individual inflation expectations surveys to inform monetary policy - at least until the nation's economic education program raises the public's understanding of inflation.

Notes and References

1 The minutes read: "The Michigan survey measure of longer-run inflation expectations fell to its lowest level on record in early June."

2 Burke, Mary A.; and Manz, Michael. "Economic Literacy and Inflation Expectations: Evidence from a Laboratory Experiment." Federal Reserve Bank of Boston Public Policy Discussion Papers, No. 11-8, November 2011.

3 "What American Teens and Adults Know about Economics." National Council on Economic Education, April 26, 2005.

4 Barro, Josh. "Erick Erickson Sees Inflation, but the Only Thing That's Inflated Is His Derp." Business Insider, June 28, 2013.

5 Hickey, Walter. "Americans Think Inflation Is Way Higher Than It Really Is." Business Insider, Oct. 7, 2013.

Additional Resources

Disclaimer

Views expressed are not necessarily those of the Federal Reserve Bank of St. Louis or of the Federal Reserve System.

Source

https://www.stlouisfed.org/on-the-economy/2016/august/consumer-surveys-inflation-expectations-fomc

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.




Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Slow Economic Growth Will Be Around For A Long Time
The Job Guarantee, Wage-Price Inflation And Alternative Solutions: Part 2
News Blog
What We Read Today 28 March 2017
NASA Precise Landing Technologies Tested On Vertical Testbed Rocket
March 2017 Conference Board Consumer Confidence Highest Since 2000
Richmond Fed Manufacturing Survey Again Improves In March 2017.
Case-Shiller 20 City Home Price Index January 2017 Shows 5.7 % Year-over-Year Growth
A Changing Rulebook To Tame The New Global Arms Race
Infographic Of The Day: Chart: Understanding Alphabet's 4 Billion Dollar In "Other Bets"
Early Headlines: Asia Stocks And Dollar Up, Oil, Gold Steady, Obama Climate Policies Gone, US Oil Glut, Euro Surges, Shorts Remain, Trump Into Yemen?, Iran-Russia Deals, Cat 4 Cyclone Hits Oz, And More
March 27, 2017 Weather and Climate Report - Will the MJO Deliver a Nino?
The Most Reputable Companies Worldwide
Gut Bacteria Play A Role In Long-term Weight Gain
What We Read Today 27 March 2017 - Special Public Edition
Is Less More In The Smartphone Market
Investing Blog
The Dollar's Coming Impact On Markets
The Real 401k Plan Manager 27 March 2017
Opinion Blog
Macron May Lead But Le Pen Remains The Big Story
Is The 20th Century Still The 'Hayek Century'?
Precious Metals Blog
These Gold Stocks Will Produce Much Bigger Gains Than Gold Itself
Live Markets
28Mar2017 Market Update: Wall Street Ends 8 Day Losing Streak, DOW Up Triple Digits After Strong Consumer Confidence Number, US Dollar Climbs Higher, Energy Up 1%
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government































 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved