Press Release

Consumers Less Optimistic About Stock Price Growth And Expect Larger Increase In Taxes

August 13, 2018

NEW YORK – The Federal Reserve Bank of New York’s Center for Microeconomic Data released the July 2018 Survey of Consumer Expectations, which finds that consumers expect  higher growth in taxes but lower growth in medical care costs. Wage growth expectations retreated somewhat, and consumers were less optimistic about stock price growth.

The main findings from the July 2018 Survey are:


  • Median inflation expectations at the one-year horizon were unchanged at 3.0%, while they declined by 0.1% at the three-year horizon to 2.9%. The decline at the three-year horizon was largest for younger (under age 40), lower-educated (high school or less) and lower income (annual income below $50,000) respondents.
  • Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—similarly remained unchanged at the one-year horizon and declined slightly at the three-year horizon.
  • Median home price change expectations retreated from a recent high of 3.9% reached in June to 3.7%, remaining well above its trailing 12-month average of 3.4%.
  • The median one-year ahead expected gasoline price change decreased from 4.8% in June to 4.6% in July, while expectations for changes in food prices rose from 4.4% to 4.5%.
  • Expectations for changes in the cost of medical care decreased from 9.6% in June to 8.5% in July, its lowest value since May 2015.

Labor Market

  • Median one-year ahead earnings growth expectations fell from 2.7% in June to 2.4% in July, dropping below its 2.5%-2.7% range since November 2017. The decline was broad based across income groups, but largest among younger (below age 40) respondents.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—remained relatively stable at 34.2% in July, just 1.9%  above the series’ low of 32.3% reached in February of this year.
  • The mean perceived probability of losing one’s job in the next 12 months fell from 15.2% in June to 14.0%, while the mean probability of leaving one’s job voluntarily in the next 12 months increased from 21.4% to 23.2%. The July reading was just 0.2% below its series’ high of 23.4% reached in August 2016.
  • The mean perceived probability of finding a job (if one’s current job was lost) increased from 58.6% in June to 59.8%, remaining just 0.3% below the series’ high of 60.1% reached in November of 2017.

Household Finance

  • Median expected household income growth increased slightly from 2.7% in June to 2.8% in July, matching its trailing 12-month average.
  • Median household spending growth expectations decreased by 0.1% to 3.2% in July, remaining slightly above its trailing 12-month average of 3.0%.
  • Perceptions of credit access compared to a year ago improved slightly, while expectations for year-ahead credit availability deteriorated, with a slightly smaller proportion expecting improving conditions.
  • The average perceived probability of missing a minimum debt payment over the next three months decreased from 12.4 % in June to 11.8% in July, remaining at the low end of the 10.7%-17.2% range observed since the start of the survey in June 2013.
  • The median expectation regarding year-ahead change in taxes (at current income level) saw its fifth consecutive increase to 2.2% after reaching a series’ low of 1.5% in February 2018.
  • The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now than it is today decreased from 37.1% in June to 36.0% in July, remaining just above its trailing 12-month of 35.2% and well above its series’ average of 31.8% respectively.
  • Perceptions of the households’ financial situations compared to a year ago indicated greater dispersion with slightly larger proportions reporting worsening and improving conditions. One-year-ahead expectations of changes in the household’s financial situation deteriorated slightly and are now comparable to the values in July 2017.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now than they are today decreased to 40.3%, its lowest level since October 2016.
  • Median year-ahead expected growth in government debt increased from 6.6% in June to 6.9% in July, well above the 4.9% median year-ahead growth forecast reported in July 2017.  

Update on Issuance of the Survey of Consumer Expectations (SCE) Content
The SCE has evolved significantly since its 2013 launch. It now includes the core survey, which is fielded monthly, and three rotating modules, which are fielded several times throughout the year (the SCE Labor Market Survey, the SCE Credit Access Survey, and the SCE Housing Survey). Given that SCE offerings have become more robust, the New York Fed has decided to streamline the release schedule. Going forward, the underlying data for the core and rotating modules will continue to be updated online as they are fielded. We will also continue to issue press releases about the core survey each month. The key change is that we will issue press releases about the rotating modules annually, instead of every time the data is updated. Doing so will ensure that the press releases highlight notable changes and trends.

The new schedule for SCE releases in 2018 has been posted to the Center for Microeconomic Data’s calendar here. This calendar indicates when we are issuing data updates-only, and when we are issuing press releases in conjunction with a data update.

On a related point, please also note that data processing issues were detected in the SCE Credit Access Survey that affected a few of our data series. These issues have been corrected and edits have been made to both the underlying data and past press releases. Today, we updated the underlying data through June 2018 (the last time the survey was fielded).

About the SCE
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.

Betsy Bourassa
(212) 720-6885
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