Press Release
Consumers Expect Slower Growth in Spending
August 10, 2015

The July 2015 Survey of Consumer Expectations results suggest relatively stable expectations about the economy. The median one-year and three-year ahead expected rates of inflation remained unchanged at 3.0 percent. While earnings and household income growth expectations were largely unchanged, median household spending growth expectations retreated substantially to their lowest level since the inception of the survey in 2013. Relative to the prior month, year-ahead credit availability expectations became slightly more pessimistic.

The main findings from the July 2015 Survey are:

Inflation

  • Median one and three year ahead inflation expectations remained stable at 3.0
  • Median home price inflation expectations resumed their general downward trend, decreasing from 3.5 percent in June to 3.2 percent in July - the second lowest level since the inception of the survey in June 2013. The decrease was especially noticeable among respondents over age 60.
  • Year-ahead gas price inflation expectations decreased by nearly a full percentage point to 4.4 percent, returning to the average level prevailing for 2014. After falling to their lowest level of the series in June at 6.7 percent, expectations about the cost of a college education reverted back to 8 percent. 

Labor Market

  • Median one-year ahead earnings growth expectations decreased by 0.1 percentage points to 2.4 percent. The small decrease in wage growth expectations was more pronounced for low-education and low-income respondents.
  • Job separation expectations increased slightly: While the mean perceived probability of losing a job remained unchanged, the mean perceived probability of leaving a job voluntarily increased one percentage point to 22.0 percent. This increase seems to be driven mostly by younger respondents.
  • The mean perceived probability of finding a job in the next three months conditional on losing a job today fell slightly to 54.5 percent. Respondents under the age of 40 reported the largest decreases in job finding expectations on average.

Household Finance

  • One-year ahead household income growth median expectations decreased slightly by 0.15 percentage points to 2.7 percent, but remain 0.5 percentage points higher than a year ago.  The decrease seems to be driven in part by respondents with less than a 4-year college degree.
  • One-year ahead household spending growth expectations decreased sharply from 4.3 percent to 3.5 percent, reaching their lowest level since the inception of the survey in June 2013. The drop seems to be more pronounced for respondents over 40 and for respondents with lower education.
  • While the perceived change in credit availability compared to a year ago remained essentially unchanged, the year-ahead credit availability expectations became slightly more pessimistic in July: Those expecting it to be harder to obtain credit in a year increased from 28.2 percent to 32.0 percent.

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