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posted on 14 March 2016

Consumers' Inflation Expectations Rebound in February 2016.

from the New York Fed

Results from the February 2016 Survey of Consumer Expectations suggest a rebound in expectations about inflation, and growth in home prices, earnings, income and spending. Additional labor expectations are mixed as the mean perceived probability of finding a job and the mean perceived probability of losing a job both declined.

The main findings from the February 2016 Survey are: [you can access the data here]:

Inflation

  • Median inflation expectations increased at the one-year horizon (from 2.4% in January to 2.7% in February) and at the three-year ahead horizon (from 2.5% in January to 2.6% in February). The increase was most pronounced among respondents with lower income, lower education and lower numeracy. Median inflation expectations at both horizons, however, remain at the low end of the range observed over the past two and a half years.
  • Median home price expectations increased by 0.1 percentage point in February to 3.1%, but remain below the series' average. The increase was broad based, but especially large in the West and Northeast.
  • The median one-year ahead gasoline price change expectations rebounded sharply, from 2.8% in January to 4.9% in February. This increase marks a return to levels not seen since the summer of 2015.
  • Expectations for changes in the prices of medical care, college education, and rent also rose slightly, while food price expectations remained stable.

Labor Market

  • After declining the past two months, the median one-year ahead expected earnings growth rebounded to 2.5% in February, back to levels recorded for most of 2015. The increase was broad-based across demographic groups, but was most pronounced among respondents with a high school degree or less.
  • Mean national unemployment expectations (that is, the mean probability that the U.S. unemployment rate will be higher one year from now), fell slightly from 38.1% in January to 37.9% in February.
  • The mean perceived probability of losing one's job in the next 12 months decreased slightly from 13.9% in January to 13.8% in February, remaining within the tight range of 12.7 to 15.0 percent seen over the past twelve months. The mean probability of leaving one's job voluntarily in the next 12 months remained stable at 21.3%.
  • The mean perceived probability of finding a job (if one's current job were lost) decreased from 56.0% in January to 53.9% in February, slightly lower than 12 months ago. This decrease was consistent across all age, education, and income groups.

Household Finance

  • Median expected household income growth increased from 2.2% in January to 2.5% in February, but remains lower than levels seen through most of 2015. The increase was driven by older, less educated, and lower income respondents.
  • Median household spending growth expectations rebounded to 4.0% in February. This brings the series closer to its historic average of 4.3% and away from the December 2015 low of 2.9%.
  • The median change in the amount of taxes respondents expect to pay a year from now reached a new series low in February at 2.6%.
  • Respondents were slightly more optimistic about perceived (over the past 12 months) and expected (over the coming 12 months) credit availability.
  • The average perceived probability of missing a minimum debt payment over the next three months remained stable at 11.8%, close to its 2015 average of 12.0%.
  • The mean perceived probability of a higher average year-ahead interest rate on savings accounts decreased from 32.1% in January to 29.9% in February, slightly higher than 12 months ago.

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. The sampling frame for the SCE is based on that used for The Conference Board's Consumer Confidence Survey (CCS). Respondents to the CCS, itself based on a representative national sample drawn from mailing addresses, are invited to join the SCE internet panel.

About the SCE Credit Access Survey

The SCE Credit Access Survey, fielded as part of the SCE (Survey of Consumer Expectations), provides information on consumers' experiences and expectations regarding credit demand and credit access. Every four months, SCE panelists are asked whether they applied for credit in the past 12 months, and the resulting outcomes. They are also asked about their expectations of applying for credit over the next twelve months, and the perceived likelihood of those applications being accepted. We collect this information for five specific credit products: auto loans, credit cards, credit card limit increases, mortgages, and mortgage refinancing. Survey findings (in instances with sufficient sample sizes) are also presented separately by age and self-reported credit score subgroups.

A full set of interactive charts detailing the monthly SCE Credit Access Survey findings can be found here.

More information about the SCE survey goals, design, and content can be found here.


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