Consumer Inflation Expectations Remain Low, Spending Growth Expectations Weaken
April 11, 2016

NEW YORK—The March 2016 Survey of Consumer Expectations (SCE) results indicate a decline in median inflation expectations at both the one-year and the three-year ahead horizons. The median expected change in gasoline prices increased sharply. Median expected household spending growth declined, while expected household income growth rose slightly. Labor market expectations were mixed, with earnings growth expectations remaining stable while the mean perceived probability of losing a job and that of finding a job (if current job were lost) both increased slightly.

The main findings from the March 2016 Survey are:


  • Median inflation expectations declined at both the one-year (to 2.5 percent from 2.7 percent in February) and the three-year ahead horizon (to 2.5 percent from 2.6 percent in February). The decline at the one-year horizon was concentrated among household heads with lower education, income and numeracy.
  • Median inflation uncertainty (that is, the uncertainty expressed by respondents regarding future inflation outcomes) decreased at both the one-year and the three-year ahead horizons, with both reaching new series lows.
  • Median home price change expectations decreased slightly to 3.0 percent, essentially in line with the readings that have prevailed since August 2015.
  • The median year ahead expected gasoline price change rose significantly to 7.3 percent, perhaps reflecting recent increases at the pump and indicating that consumers expect further increases in gas prices.
  • Expectations for price changes in other items remained fairly stable, with the median expected price change for food, rent and medical care declining slightly and that for college education rising slightly.

Labor Market

  • Median one-year ahead expected earnings growth remained essentially unchanged at 2.5 percent, remaining at the high end of the (1.8 percent - 2.7 percent) range observed since the inception of the survey. Expected earnings growth weakened for lower educated workers and strengthened for higher educated workers.
  • The mean perceived probability of losing one's job in the next 12 months rose slightly to 14.4 percent from 13.8 percent in February, remaining within the tight range of 12.7 to 15.0 percent seen over the previous twelve months. This was accompanied by a decline in the mean perceived probability of leaving one's job voluntarily (from 21.3 percent to 20.0 percent).
  • The mean perceived probability of finding a job (if current job were lost) increased marginally from 53.9 percent to 54.3 percent, remaining slightly below the average of 55.1 percent observed in the previous 12 months. The increase was driven primarily by higher educated respondents.

Household Finance

  • Median expected household income growth rose slightly to 2.6 percent from 2.5 percent in February, continuing the rebound observed in February but remaining below values recorded during Spring and Summer 2015. Consistent with the findings for earnings growth, expected household income growth weakened for lower education household heads and firmed up for higher education ones.
  • On the other hand, median household spending growth expectations declined from 4.0 percent to 3.4 percent, partly reversing the sharp rebound recorded in February and falling in line with the average reading over the second half of 2015.
  • Perceived (over the past 12 months) and expected (over the coming 12 months) credit availability improved slightly, while the average perceived probability of missing a minimum debt payment over the next three months decreased slightly from 11.8 percent to 11.5 percent, printing below the average reading over the past 12 months.
  • The mean perceived probability of a higher average year-ahead interest rate on savings accounts decreased from 30 to 28 percent, returning to values that prevailed through much of 2014 and early 2015.
  • While perceived household financial situation improved slightly compared to a year ago, the shares of respondents expecting either better or worse future conditions over the coming 12 months both declined, with more expecting no change.

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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