Consumer Expectations Largely Stable in October
November 14, 2016

NEW YORK—Results from the October 2016 Survey of Consumer Expectations (SCE) show mainly stable expectations. Inflation expectations increased slightly at the one-year horizon but remained unchanged at the three-year horizon. The most notable change in October was a month to month drop in expected household spending growth.

The main findings from the October 2016 Survey are:


  • Median inflation expectations increased slightly at the one-year horizon from 2.5% in September to 2.6% in October and remained unchanged at 2.6% at the three-year ahead horizon. The increase in year-ahead inflation expectations was driven by older respondents.
  • Median inflation uncertainty (that is, the uncertainty expressed by respondents regarding future inflation outcomes) remained unchanged at both the one-year and the three-year ahead horizons.
  • Median home price expectations were essentially flat at 3.2%, remaining within the narrow 3.0-3.3% band observed over the last 12 months. While stable on aggregate, home price expectations increased sharply for respondents residing in the Northeast (from 2.3% to 3.0%), while falling for respondents residing in the West (from 4.0% to 3.4%).
  • The median one-year ahead expected gasoline price change increased slightly, from 4.8% in September to 5.0% in October. Expectations for changes in medical care costs and rent increased in October while those for the cost of college education declined.

Labor Market

  • Median one-year ahead expected earnings growth increased slightly from 2.0% to 2.1% remaining at the lower end of the range observed over the past two years and below the series average of 2.3%.
  • Mean unemployment expectations (that is, the mean probability that the U.S. unemployment rate will be higher one year from now), decreased slightly from 39.4% in September to 38.8% in October, but remain well above last year's levels.
  • The mean perceived probability of losing one's job in the next 12 months declined in October (falling from 16.3% in September to 14.0%), returning to the levels observed at the beginning of the year. The decrease was broad-based across all age, education and income groups. The mean probability of leaving one's job voluntarily in the next 12 months decreased slightly from 22.8% to 22.3%.
  • The mean perceived probability of finding a job (if one's current job were lost) remained essentially flat at 54.9%.

Household Finance

  • Median expected household income growth declined to 2.5% in October from 2.6% in September and 2.9% in August. The decrease was driven primarily by lower educated and lower income respondents.
  • Median household spending growth expectations dropped sharply in October to 3.2% from 3.7% in September. This series has been volatile, but the current reading is below the average since the beginning of the year of 3.5%. The decrease was driven primarily by older and lower educated respondents.
  • The perceived change in credit availability compared to a year ago and, in particular, the year-ahead expected credit availability both deteriorated somewhat in October.
  • The average perceived probability of missing a minimum debt payment over the next three months was essentially unchanged at 14.4%, remaining well above its average for the past two years.
  • Median year-ahead expected growth in government debt increased from 6.0% in September to 7.0% in October, its highest level since late-2015.

On Friday, November 18, the New York Fed will host its next quarterly Economic Press Briefing, which will focus on the SCE. New York Fed President William Dudley will provide opening remarks and will join a panel of New York Fed economists to answer questions after the presentation. Additional information, including detail on press registration, is available the New York Fed's website.

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.

Betsy Bourassa  
(212) 720-6885

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