Press Release

Inflation Expectations Rise in December Amid Growing Optimism About Labor Market

January 16, 2018

NEW YORK—The New York Fed’s Center for Microeconomic Data today released the December 2017 Survey of Consumer Expectations, which shows an increase in short- and medium-term inflation expectations. Expectations about income and spending growth decreased, but expectations about household financial situations and credit availability improved. Labor market expectations continued to improve, with expectations about earnings growth and unemployment reaching levels not seen since late 2014.

The main findings from the December 2017 Survey are::


  • Median inflation expectations at the three-year horizon increased from 2.8% in November to 2.9% in December, while at the one-year horizon they rose from 2.6% to 2.8%. The increase was largely driven by respondents under the age of 40.
  • Median inflation uncertainty—or the uncertainty expressed by respondents regarding future inflation outcomes—increased slightly at both horizons.
  • The median home price change expectations decreased 0.1 percentage points to 3.2% in December, but it has remained fairly stable over the past six months.
  • Commodities price expectations changed relatively little in December. The median one-year-ahead expected gasoline price change decreased from 4.3% in November to 4.1% in December, while the median expected change in food prices increased from 4.4% to 4.6%. Expectations for a change in the cost of a college education decreased from 8.0% in November to 7.8% in December.

Labor Market

  • Median one-year-ahead earnings growth expectations continued to increase, from 2.6% in November to 2.7% in December, a level last reached in November 2014. The increase was driven by respondents between the age of 40 and 60, and respondents with annual income between $50,000 and $100,000.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—dipped 0.2 percentage points to 33.5% in December, the lowest level since December 2014.
  • 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 increased slightly, from 13.5% to 13.8%, and from 21.5% to 21.7%, respectively.
  • The mean perceived probability of finding a job (if one's current job was lost) was stable, at 60.0%, remaining above the trailing 12-month average of 57.7%.

Household Finance

  • Median expected household income growth decreased 0.2 percentage points in December, to 2.8%, but remained in line with the trailing 12-month average of 2.7%. The decrease was most pronounced among respondents with no more than a high school education.
  • After a sharp increase in November, median household spending growth expectations dropped 0.7 percentage points in December, to 2.9%, thereby returning to the average level seen between March and October 2017.
  • The household’s expected financial situation improved, with 43.2% of respondents expecting to be better off financially a year from now, compared to 42.2% in November.
  • The perceived change in credit availability compared to a year ago improved slightly, as did year-ahead expected credit availability. In particular, the proportion of respondents reporting that credit has become harder to get relative to 12 months ago reached a new series low.
  • The average perceived probability of missing a minimum debt payment over the next three months was unchanged, at 12.5%.
  • The median expectation regarding year-ahead change in taxes (at current income level) decreased 0.1 percentage points in December, to 2.2%.
  • The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now than it is today rose from 34% in November to 34.5% in December.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now than they are today increased from 42.6% in November to 44.3% in December, which is above the trailing 12-month average of 43.5%.
  • Median year-ahead expected growth in government debt dropped to 7.2%, from 7.8% in November (the highest level in 2017), but remains high compared to the past 12 months.

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 1,300 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.

Brian Manning
(212) 720-6143
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