Press Release

Inflation Expectations Unchanged, Labor Market Expectations Improve, and Spending Growth Expectations Decline Slightly in September

October 09, 2018

NEW YORK—The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the September 2018 Survey of Consumer Expectations, which shows no change in short- and medium-term inflation expectations. Labor market expectations generally improved with the median one-year ahead earnings growth expectations reaching a new series’ high and households having more optimistic unemployment expectations. In contrast, expectations about household income and spending growth both declined.

The main findings from the September 2018 Survey are:


  • Median inflation expectations at both the one-year and three-year horizons remained stable in September at 3.0%. Inflation expectations at both horizons have been virtually unchanged since April 2018.
  • Median inflation uncertainty—or the uncertainty expressed by respondents regarding future inflation outcomes—decreased slightly for both horizons compared to last month.
  • Median home price change expectations remained steady in September at 3.6% after having declined the previous two months from a three-year high of 4.9% in June. Median home price change uncertainty also remained unchanged.
  • The median one-year ahead expected price change for gasoline, food, college education, and rent changed little in September, staying within 0.1 percentage points relative to last month’s expectations. In contrast, the median expected change in medical care and gold increased 0.7 and 0.4 percentage points to 9.2% and to 2.6%, respectively.

Labor Market

  • Median one-year ahead earnings growth expectations increased 0.3 percentage points in September to 2.8%, the series’ all-time high. The increase was driven by respondents with annual income between $50,000 and $100,000. The median one-year ahead earnings growth uncertainty was unchanged in September.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—decreased 1.2 percentage points to 34.1% in September, but remains around its 2018 average of 34.0%.
  • The mean perceived probability of losing one’s job in the next 12 months increased from 13.8% in August to 16.0% in September, its highest level since November 2016. The mean probability of leaving one’s job voluntarily in the next 12 months also increased from 20.6% in August to 23.4% in September, its highest level since August 2016.
  • The mean perceived probability of finding a job (if one’s current job was lost) increased from 57.8% in August to 59.3% in September, slightly above its 12 month trailing average of 58.9%.

Household Finance

  • Median expected household income growth decreased 0.3 percentage points in September to 2.5%, its lowest level of the year. The decrease was most pronounced among older (above 60 years old) and low to mid-income (annual income below $100,000) respondents.
  • Median household spending growth expectations declined for the third month in a row, from 3.2% in August to 2.9% in September, falling below its 2018 average of 3.1%.
  • Households’ perceptions about their current financial situations deteriorated in September, with the proportion of respondents feeling they are better off than a year ago decreasing 2.4 percentage points to 34.9%. This is the lowest level since October 2017. In addition, respondents were slightly less optimistic about their future households’ financial situations, with the proportion of respondents expecting to be worse off financially a year from now increasing 1.1 percentage points to 12.0% in September.
  • The perceived and expected change in credit availability were mixed in September. The proportion of respondents reporting that credit has become easier to get than 12 months ago increased 0.8 percentage points to 24.9%, while the proportion of respondents who expect credit to become harder to get in 12 months also increased 0.6 percentage points compared to August to 31.1% in September (the highest level over the past 12 months).
  • The median expectation regarding year-ahead change in taxes (at current income level) increased 0.3 percentage points to 2.5%, the series’ high since August 2017.
  • The average perceived probability of missing a minimum debt payment over the next three months increased 0.9 percentage point to 13.7% in September, a new series high since January 2017. The increase was driven by respondents with low annual income (below $50,000) and low education (high school or below).
  • The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now than it is today rose to 36.8% in September, in line with its average over the past 6 months.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now than they are today increased from 40.0% in August to 41.6% in September, remaining near its 2018 average of 41.7%.
  • Median year-ahead expected growth in government debt declined from 7.9% in August to 7.0% in September, but still remains close to its 2017 average of 7.1%.

About the Survey of Consumer Expectations (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.

Betsy Bourassa
(212) 720-6885
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