There was a slight increase in August for medium-term inflation expectations, according to the Federal Reserve Bank of New York’s Survey of Consumer Expectations released Monday.
“Median inflation expectations at the one-year horizon remained unchanged at 3.0%, while they increased by 0.1 percentage points at the three-year horizon to 3.0% in August, returning to its June reading. Inflation uncertainty remained unchanged,” the N.Y. Fed’s Center for Microeconomic Data said in a release.
However, expectations about the growth in government debt rose to a level not seen in nearly three years, the N.Y. Fed said. Median year-ahead expected growth in government debt increased to 7.9% in August from 6.9% in July, the highest reading since November 2015.
Income and spending growth expectations remained stable. Median one-year ahead earnings growth expectations increased to 2.5% last month from 2.4% in July, tying its 12-month trailing average. The increase was most pronounced among lower educated (high school degree or less) respondents.
However, mean unemployment expectations — or the mean probability that the U.S. unemployment rate will be higher one year from now — jumped to 35.3% in August from 34.2% in July, reaching its highest level since October 2017. Both the mean perceived probability of losing one’s job in the next 12 months and the mean probability of leaving one’s job voluntarily in the next 12 months declined to 13.8% from 14.0% and to 20.6% from 23.2%, respectively.
The mean perceived probability of finding a job (if one’s current job was lost) declined to 57.8% in August, falling below its 12-month trailing average of 59.0%, but remaining within its tight 57.1 to 60.1 range observed since July of 2017.
Expectations about household financial situations improved, the N.Y. Fed said.
The N.Y. Fed said median expected household income and the median household spending growth expectations remained unchanged in August at 2.8% and 3.2%, respectively.
Perceptions of credit access compared to a year ago indicated greater dispersion, with the proportion of respondents reporting harder access increasing to 28.2% from 27.1% and the proportion of those reporting easier access also increasing to 24.1% from 23.7%. Expectations for year-ahead credit availability, on the other hand, improved slightly in August, with the proportion expecting improving conditions in credit access increasing to 21.1% from 19.7%.
The average perceived probability of missing a minimum debt payment over the next three months increased to 12.8% from 11.8 % in July, reaching its highest level since October 2017. The increase was broad-based across education and income groups.
The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now than it is today declined to 35.2% from 36.0% in July.
Perceptions of households’ financial situations compared to a year ago were largely unchanged, the N.Y. Fed said. But one-year ahead expectations of households’ financial situations improved considerably with 44.5% of respondents expecting to be better off financially, compared to 41.4% in July and 11.0% expecting to be worse off financially, compared to 12% in July.
