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posted on 14 August 2017

July 2017 Consumer Expectations: Mostly Steady While Household Income Growth Expectations Reach a Series High

from the New York Fed

Results from the July 2017 Survey of Consumer Expectations show that inflation expectations held mostly steady: Median inflation expectations remained unchanged at the one-year horizon and fell only slightly at the three-year horizon.

Consumers' outlook for the labor market was largely positive, with unemployment and earnings expectations improving. Household income growth expectations rose to a new series high.

z sce.png

The main findings from the July 2017 Survey are:


  • Median inflation expectations were unchanged at the one-year horizon (at 2.5%) and decreased slightly at the three-year ahead horizon (from 2.8% in June to 2.7% in July).
  • Median inflation uncertainty (that is, the uncertainty expressed by respondents regarding future inflation outcomes) declined at both horizons, returning to the series low (set last May) of 2.2% at the one-year horizon, and declining slightly to 2.6% at the three-year horizon.
  • Median one-year ahead home price change expectations declined from 3.5% in June to 3.2%. The decline was largest in the West and Midwest.
  • Median one-year ahead expected gasoline price change declined for the third consecutive month, from 4.6% in April, to 3.8% in June, to 3.0% in July, its lowest value since January 2016. Expectations for changes in the cost of medical care, rent and food prices were largely stable.

Labor Market

  • Median one-year ahead expected earnings growth expectations increased by 0.1 percentage point in July to 2.6%, its highest reading since March 2015.
  • Mean unemployment expectations (that is, the mean probability that the U.S. unemployment rate will be higher one year from now) declined from 36.3% in June to 36.0%.
  • The mean perceived probability of losing one's job in the next 12 months increased slightly from 13.5% in June to 13.7%. The mean probability of leaving one's job voluntarily in the next 12 months increased for the second month in a row, from 20.8% in June to 21.7%.
  • The mean perceived probability of finding a job (if one's current job were lost) dropped 2.1 percentage points in July to 57.1%.

Household Finance

  • Median expected household income growth increased 0.3 percentage points in July to 3.0%, its highest level since the inception of the survey in June 2013.
  • Median household spending growth expectations decreased from 3.3% in June to 2.8%. This series has been volatile, but the current reading is below its average of 3.2% for the most recent 12 months. The decrease was driven mostly by less educated (high school or less) respondents.
  • The perceived change in credit availability compared to a year ago improved somewhat, while year-ahead expected credit availability stayed largely unchanged.
  • The average perceived probability of missing a minimum debt payment over the next three months remained essentially stable as 12.2%.
  • The mean perceived probability that the average interest rate on saving accounts will be higher one year from now fell for the fourth consecutive month, from a series high of 41.8% in March to 34.0% in July.
  • The proportion of respondents who perceive being better off financially compared to a year ago remained stable at 34.7%, while the proportion of respondents who expect being better off financially a year from now declined from 43.7% in June to 41.4%.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now declined 1.9 percentage points in July to 41.7%, its lowest reading since November 2016.
  • Median year-ahead expected growth in government debt remained steady at 4.9%.

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.


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