Consumers’ Earnings and Income Growth Expectations Rebound while Medium-Term Inflation Expectations Rise
July 11, 2016

NEW YORK—Results from the June 2016 Survey of Consumer Expectations show a rebound in earnings and income growth expectations. At the same time, labor market expectations were mixed, with both the mean perceived probability of losing the current job and that of finding a job declining.  Inflation expectations fell slightly at the one-year horizon but increased at the three-year horizon.

The main findings from the June 2016 Survey are:


  • Median inflation expectations decreased slightly at the one-year horizon (from 2.6 percent in May to 2.5 percent in June), and increased at the three-year ahead horizon (from 2.7 percent in May to 2.9 percent in June). Changes in inflation expectations at both horizons were consistent across all income groups.
  • Median inflation uncertainty (that is, the uncertainty expressed by respondents regarding future inflation outcomes) increased at both the one-year and the three-year ahead horizons and is now at the high end of its range for the past two years.
  • Median home price expectations decreased by 0.1 percentage point in June to 3.1 percent, remaining within the narrow 3.0-3.2 percent band observed over the last 12 months, but well below the series’ average.  The decrease was driven by higher education and income respondents and those under age 60.
  • The median one-year ahead expected gasoline price change declined slightly, from 5.5 percent in May to 5.3 percent in June, while expectations for changes in the prices of food and rent rose slightly.

Labor Market

  • Median one-year ahead expected earnings growth rebounded after a sharp decline in May, increasing from 2.2 percent to 2.5 percent, thereby returning to the relatively high levels seen during the spring. The increase was driven primarily by younger and lower educated respondents.
  • Mean unemployment expectations (that is, the mean probability that the U.S. unemployment rate will be higher one year from now), decreased from 39.1 percent in May to 38.1 percent in June, but remain above last year’s levels. The decrease was driven by younger, lower educated and lower income respondents.
  • The mean perceived probability of losing one’s job in the next 12 months declined again in June, falling from 14.9 percent in May to 13.8 percent and returning to the relatively low levels seen at the beginning of the year. On the other hand, the mean probability of leaving one’s job voluntarily in the next 12 months also decreased from 21.8 percent to 20.0 percent. Both decreases were driven by younger (under 40) and lower income respondents.
  • The mean perceived probability of finding a job (if one’s current job were lost) decreased from 55.1 percent in May to 53.6 percent in June, below its post-2014 average. This decrease was broad-based across demographic groups.

Household Finance

  • Median expected household income growth rebounded from last month’s sudden decline, increasing from 2.4 percent in May to 2.8 percent in June. The increase was broad-based across education and income groups. Barring the blip in May, income growth expectations have been trending upward since January.
  • Median household spending growth expectations remained steady, increasing slightly from 3.5 percent in May to 3.6 percent in June. The increase was driven by lower educated and lower income respondents.
  • Perceptions of credit access relative to a year ago were essentially unchanged, while respondents were slightly more pessimistic about year-ahead credit availability.
  • The average perceived probability of missing a minimum debt payment over the next three months continued its recent upward trend, increasing from 12.8 percent in May to 13.3 percent in June, a level not seen since December 2014.
  • Median year-ahead expected growth in government debt declined from 5.8 percent in May to 5.5 percent in June, matching the series low set in March 2015.  

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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