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posted on 09 February 2015

Consumers Report Stable Inflation Expectations, Lower Spending Growth Expectations

from the New York Fed

The Federal Reserve Bank of New York today released results from its January 2015 Survey of Consumer Expectations (SCE), which provides insight into Americans' views on inflation, prices, the labor market and household finance. Median consumer inflation expectations were largely unchanged at both the one-year and the three-year ahead horizons at 2.9 percent and 3.0 percent, respectively. Median household spending growth expectations retreated significantly from the last month. The mean perceived probability of finding a job in the next three months (if one were to lose one's current job) continued to increase.

Additional results from January 2015 include:


  • Median inflation expectations remained largely stable at both the one-year and the three-year ahead horizons at 2.9 percent and 3.0 percent, respectively. At the one-year horizon, the 75th percentile of responses declined slightly, reaching its lowest level since the start of the series in June 2013.
  • Median home price change expectations decreased to 3.4 percent from 3.6 percent in December 2014, the lowest point since the start of the series.
  • Median one-year ahead gasoline price change expectations rebounded to 4.7 percent, reversing the sharp decline observed since October 2014 and returning to the levels observed in summer 2014.

Labor Market

  • Median earnings growth expectations were 2.5 percent in January, unchanged from December 2014 and still at the high end of the range observed since the start of the series.
  • The mean perceived probability of losing one's job remained unchanged from December 2014 at 14.5 percent, its lowest level since July 2013.
  • The mean perceived probability of finding a job in the next three months (conditional on losing one's job today) increased to 53.3 percent from 51 percent in December 2014, reaching its highest level since the start of the series.

Household Finance

  • Median household income growth expectations declined slightly to 2.7 percent from 2.9 percent in December 2014. The 25th and 75th percentiles also retreated slightly. The decline in median expectations was concentrated among the lower- and middle-income households, as well as respondents with high school or less, or some college.
  • Median household spending expectations declined sharply to 4.1 percent from 4.8 percent in December 2014, reaching its lowest level since the start of the series. The 25th and 75th percentiles of responses also declined. The decline was common across all demographic groups and U.S. regions, except for the North-East.
  • The expected change in credit availability a year from now or compared to a year ago exhibited little change from December 2014. The proportion of respondents expecting credit availability much or somewhat harder a year from now rose to 33 percent from 31 percent in December 2014, but is still at the low end of the (31 percent - 47 percent) range observed since the start of the series.

About the Survey of Consumer Expectations

The SCE contains information about how consumers expect overall inflation and prices for food, gas, housing 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 SCE also provides measures of uncertainty in expectations for the main outcomes of interest. Expectations are also available by age, geography, income, education and numeracy.

The SCE is a nationally representative, internet-based survey of a rotating panel of approximately 1,200 household heads. Respondents participate in the panel for up to twelve months, with a roughly equal number rotating in and out of the panel each month. Unlike comparable surveys based on repeated cross-sections with a different set of respondents in each wave, our panel allows us to observe the changes in expectations and behavior of the same individuals over time.

The survey is conducted on our behalf by The Demand Institute, a non-profit organization jointly operated by The Conference Board and Nielsen.

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