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posted on 08 May 2017

April 2017 Consumer Expectations: Spending Growth Expectations Dropped Sharply

from the New York Fed

The April 2017 Survey of Consumer Expectations shows shows that while household income growth expectations increased and respondents' outlook for their households' overall financial situation reached a new series high, spending growth expectations dropped sharply - falling to their lowest level since the start of our survey in June 2013.

Inflation expectations increased at both the one-year-ahead and three-year-ahead horizons, while inflation uncertainty declined.

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The main findings from the April 2017 Survey are:


  • Median inflation expectations increased from 2.7% in March to 2.8% in April at the one-year ahead horizon, and from 2.7% to 2.9% at the three-year ahead horizon. Both increases were driven by lower education (those with a high school degree or less) and lower income (annual incomes of less than $50,000) respondents.
  • Median inflation uncertainty (the uncertainty expressed by respondents regarding future inflation outcomes) declined sharply at both horizons, with our measure reaching or matching a series low at both horizons.
  • Median home price change expectations increased slightly from 3.3% in March to 3.4%, moving marginally above the narrow 3.0% to 3.3% band observed since July 2015.
  • The median one-year ahead expected gasoline price change increased from 4.3% in March to 4.6%, while expectations for changes in the cost of medical care, rent, college education and food prices were largely stable.

Labor Market

  • Median one-year ahead earnings growth expectations increased from 2.4% in March to 2.5%, a level last seen in June 2016. The increase was driven by respondents with household incomes below $100,000.
  • Mean unemployment expectations (the mean probability that the U.S. unemployment rate will be higher one year from now) increased slightly from its 20-month low of 35.5% reached in March to 36.5%.
  • The mean perceived probability of losing one's job in the next 12 months declined from 14.5% in March to 13.2%, a level last reached in October 2015. The decrease was broad-based across all age, education and income groups.
  • The mean probability of leaving one's job voluntarily in the next 12 months also decreased from 21.3% in March to 19.9%.
  • The mean perceived probability of finding a job (if one's current job was lost) retreated from its series high of 59.3% reached in March to 56.5%. The decline was largest for younger (under age 40) and lower-education (with a high school degree or less) respondents.

Household Finance

  • Median expected household income growth increased from 2.5% in March to 2.8%, slightly above its previous 12-month average of 2.7%.
  • Median household spending growth expectations dropped sharply from 3.3% in March to 2.6%, the lowest level observed since the start of our survey in June 2013. The decline was fairly widespread, but largest among lower education (high school or less) and lower income (below $50,000 household income) respondents.
  • The perceived change in credit availability compared to a year ago was largely unchanged while year-ahead expected credit availability improved somewhat in April compared to March.
  • The average perceived probability of missing a minimum debt payment over the next three months increased from 11.2% in March to 12.2%.
  • The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now (than it is today) fell from its series high of 41.8% in March to 39.2%.
  • Expectations of the household's financial situation one-year ahead improved to a new series high, with 44.4% of respondents expecting to be better off financially, and only 11.1% expecting to be worse off.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now (than they are today) declined modestly from its March high 45.4% to 43.8%.
  • Median year-ahead expected growth in government debt increased slightly from 5.2% in March to 5.3%, but remaining well below the series average of 7.2%.


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