Press Release

Inflation Expectations Unchanged; Consumers’ Optimism about Household Finances Abates Somewhat in May

June 11, 2018

NEW YORK— The Federal Reserve Bank of New York’s Center for Microeconomic Data released the May 2018 Survey of Consumer Expectations, which shows short- and medium- term inflation expectations remained unchanged.Households’ expectations about income, earnings and spending growth all declined, along with year-ahead expectations about household financial situations and credit availability.

The main findings from the May 2018 Survey are:


  • Median inflation expectations at both the one-year and three-year horizons remained unchanged in May at 3.0%. Inflation uncertainty increased to its highest level since March 2017.
  • Median home price change expectations remained flat at 3.7% in May, still well above its trailing 12-month average of 3.3%. Home price growth uncertainty rose to its highest level since May 2017.
  • The median one-year-ahead expected gasoline price change increased from 4.8% in April to 5.2% in May, its highest reading since June 2016. Expectations for changes in the cost of medical care, college education and rent also increased from 8.9%, 6.3% and 5.5% to 9.3%, 6.7% and 5.7%, respectively. Expectations for changes in food prices, on the other hand, declined from 4.7% in April to 4.5% in May.

Labor Market

  • Median one-year-ahead earnings growth expectations declined from 2.7% in April to 2.5% in May, tying its 12-month trailing average. The decrease was most pronounced among older (at least 40 years old) and lower educated (high school degree or less) respondents.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—decreased slightly from 34.9% in April to 34.1% in May, just below its 12-month trailing average of 34.8%.
  • 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, from 13.7% to 14.0%, and from 20.5% to 21.4%, respectively.
  • The mean perceived probability of finding a job (if one’s current job was lost) increased to 59.9% in May, just 0.2 percentage points below the series’ high reached in November 2017.

Household Finance

  • Median expected household income growth decreased from 2.9% in April to 2.6% in May. The decline was most pronounced among lower educated (high-school degree or less) and lower income (annual income below $50,000) respondents.
  • Median household spending growth expectations retreated to 3.0% in May, after increasing for three consecutive months. This reading is equal to its trailing 12-month average.
  • The median expectation regarding year-ahead change in taxes (at current income level) increased to 2.2%, its third consecutive increase since reaching a series low of 1.5% in February.
  • The perceived change in credit availability compared to a year ago improved in May, with the proportion of respondents reporting easier credit access compared to a year ago increasing from 22.1% to 23.9%. However, expectations for year-ahead credit availability worsened slightly in May, with the proportion expecting tightening in credit access increasing slightly from 29.1% to 30.4%.
  • The average perceived probability of missing a minimum debt payment over the next three months increased slightly from 11.0 % in April to 11.7% in May. The increase was broad-based across age groups.
  • The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now than it is today declined from 36.8% in April to 36.4% in May.
  • One-year-ahead expectations of households’ financial situations worsened somewhat with 13.7% of respondents expecting to be worse off financially, compared to 11.8% in April.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now than they are today increased to 42.0% in May, remaining below its trailing 12-month average of 43.0%.

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.

Betsy Bourassa
(212) 720-6885
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