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posted on 09 March 2015

February 2015: Consumers Expect Lower Home Price Growth, Mixed Labor Market.

from the New York Fed

Results from the February 2015 Survey of Consumer Expectations (SCE) paint a multifaceted picture of the direction of the US economy. Median consumer inflation expectations at the short term horizon declined slightly to 2.8 percent, but remained stable at the three-year horizon. Both home price expectations and household spending change expectations fell to their lowest levels since the inception of the survey in June 2013. While earnings growth expectations also declined, other indicators of the labor market (such as likelihood of losing one's job) continued to improve. Credit availability expectations remained unchanged.

Additional results from January 2015 include:


  • Median inflation expectations at the one-year horizon declined for the third month in a row, 3percent in November 2014 to 2.8 percent, their lowest level since the beginning of the series in June 2013. This decline was driven primarily by younger individuals, and those without a bachelor's degree. Median individual-level uncertainty in one-year ahead inflation expectations also declined to its lowest level since the inception of the survey in June 2013.
  • Longer-term (three-year ahead) inflation expectations remained unchanged at 3 percent.
  • Median home price change expectations declined sharply from 3.4 percent in January to 3 percent, their lowest level since the survey's inception. This is the third consecutive month that home price expectations have declined; as a result, the current reading is substantially below the 2014 average of 3.8 percent. Median home price expectations declined in all parts of the country, except the Northeast, with particularly pronounced declines in the West.
  • Median one-year ahead gasoline price change expectations jumped from 4.7 percent in January to 8.7 percent, their highest level since the start of the series in June 2013.

Labor Market

  • Median earnings growth expectations declined from 2.5 percent in January to 2.2 percent, their lowest level since July 2014. There was little change in the cross-sectional distribution of median expectations though. The decline in expectations was observed for lower-income, lower-education, and younger respondents.
  • The mean perceived probability of losing one's job fell to 14.3 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) jumped to 54.5 percent. This is its highest reading since the inception of the survey. The increase was driven primarily by individuals under the age of 40.

Household Finance

  • While median household income growth expectations were largely unchanged at 2.7 percent, both the 25th and 75th percentiles of the (cross-sectional) distribution declined. The 75th percentile, for example, declined from 6.4 percent in January to 5.8 percent.
  • Median household spending expectations fell from 4.1 percent to 3.8 percent, their lowest reading since the beginning of the series. This drop was driven primarily by younger and lower-income respondents; for example, the median expectation for individuals with household income of less than $50,000 declined from 4.5 percent in January to 4.1 percent.
  • Expected (and perceived) change in credit availability a year from now or compared to a year ago was unchanged from the previous month. The mean likelihood of missing a minimum debt payment over the next three months fell a full percentage point below its January level to 11.9 percent, its lowest level since June 2013.

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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