Press Release

Consumers’ Inflation Expectations Decline in February

March 11, 2019

NEW YORK— The Federal Reserve Bank of New York’s Center for Microeconomic Data released the February 2019 Survey of Consumer Expectations, which shows a decline in the short- and medium-term inflation expectations. Medical care price growth expectations declined to a series low. Expectations about the U.S. unemployment rate improved, while job finding and job loss expectations remained stable.

The main findings from the February 2019 Survey are:


  • Median inflation expectations at both the one-year and three-year horizons declined by 0.2 percentage points to 2.8% in February, after having remained essentially unchanged since April 2018. Inflation uncertainty—or the uncertainty expressed by respondents regarding future inflation outcomes—also declined slightly at both the one- and three-year horizons.
  • Median home price change expectations remained steady at 3.0% for the third consecutive month. This was the lowest reading of the series.
  • The median one-year ahead expected changes in the cost of medical care declined from 8.3% in January to 7.5% in February. This is the lowest reading of the series since its inception in June 2013.
  • In contrast, the median one-year ahead expected price change for gas, college education, and rent changed little in February, staying within 0.1 percentage points of the previous month’s expectations.

Labor Market

  • Median one-year ahead earnings growth expectations increased marginally from 2.4% in January to 2.5% in February, returning to its December 2018 reading.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—declined from 40.6% in January to 37.2% in February, but remains above its 12-month trailing average of 35.3%. The decline was broad-based across age, education, and income groups.
  • The mean perceived probability of losing one’s job in the next 12 months increased slightly from 14.5% in January to 14.6% in February. On the other hand, the mean probability of leaving one’s job voluntarily in the next 12 months decreased from 21.4% in January to 21.2%.
  • The mean perceived probability of finding a job (if one’s current job was lost) remained stable at 59.2% in February, just 0.9% below the series high of 60.1% reached in November 2017.

Household Finance

  • The median expected household income declined from 2.8% in January to 2.5% in February. The decline was driven by lower educated (high school degree or less) respondents. In contrast, the median household spending growth expectations increased from 3.0% in January to 3.1% in February, after a sharp decline last month.
  • Perceptions of credit access compared to a year ago indicated smaller dispersion. The proportion of respondents who reported experiencing more difficulties accessing credit declined from 31.5% to 29.8%, while the proportion of those reporting easier access also declined from 24.5% to 22.6%. Meanwhile, expectations for year-ahead credit availability improved somewhat in February. The proportion expecting improving conditions in credit access increased from 18.1% to 19.0%, while the proportion expecting worsening conditions in credit access declined from 36.1% to 32.5%.
  • The average perceived probability of missing a minimum debt payment over the next three months decreased from 12.0% in January to 10.9% in February, its lowest reading since March 2018.
  • The median expectation regarding year-ahead change in taxes (at current income level) declined from 2.7% in January to 2.5%, remaining well above its 12-month trailing average of 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 declined from 37.0% in January to 34.8% in February, its lowest reading since December 2017. The decrease was broad-based across age, education, and income groups.
  • One-year ahead expectations as well as perceptions about households’ current financial situations improved in February, with slightly higher proportions of respondents expecting to be and feeling better off financially.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now than they are today increased from 40.4% in January to 42.0% in February. This was the second consecutive increase after reaching 39.6%, its lowest level since October 2016, in December 2018.

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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