Press Release

Consumers' Inflation Expectations Decline Further in May

June 10, 2019

NEW YORK – The Federal Reserve Bank of New York’s Center for Microeconomic Data released the May 2019 Survey of Consumer Expectations, which shows a decline in short- and medium- term inflation expectations. Households were generally less positive about their current and future financial situation, even though their average earnings growth and job finding expectations improved. Consumers see an increase in the average interest rate on savings accounts over the next year as less likely, with its average likelihood declining to the lowest level since October 2016.

The main findings from the May 2019 Survey are:


  • Median inflation expectations declined by 0.1 percentage points at both the one-year and three-year horizon in May, to 2.5% and 2.6%, respectively—the lowest readings since late 2017. The declines were broad-based across income and age groups.
  • Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—increased at both the one-year and three-year horizon.
  • Median home price change expectations were stable in May, at 3.0%, the sixth consecutive reading at this level.
  • Expectations for change in the cost of a college education declined to 5.9% in May, from 7.2% in April, while the median one-year ahead expected change in the cost of medical care increased to 8.0%, from 7.8% in April. This is the third consecutive increase in the expected change in the cost of medical care.

Labor Market

  • Median one-year ahead earnings growth expectations increased to 2.5% in May, from 2.4% in April. The series has held within a narrow range of 2.4% to 2.6% since December 2018.  Median earnings growth uncertainty also increased.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—increased 1.0 percentage point in May, to 36.7%. The increase was broad-based across education groups.
  • The mean perceived probability of losing one’s job in the next 12 months increased to 14.7%, from 13.6% in April, moving above the trailing 12-month average of 14.3%. The mean probability of leaving one’s job voluntarily in the next 12 months increased to 21.2% from 20.3%, remaining below the trailing 12-month average of 21.6%.  
  • The mean perceived probability of finding a job (if one’s current job was lost) increased to 61.5%, from 59.3% in April, reaching the highest level since the start of the series in June 2013. The increase was largest among respondents with annual household income less than $50,000.

Household Finance

  • Median expected household income growth decreased slightly in May, to 2.8%, from 2.9% in April. The decline was driven by respondents without a college degree.
  • Median household spending growth expectations increased to 3.5% in May, from 3.3% in April. Spending growth expectations have been volatile and exhibit seasonality.
  • Perceptions of credit access compared to a year ago were largely unchanged, while expectations for year-ahead credit availability deteriorated somewhat.
  • The average perceived probability of missing a minimum debt payment over the next three months increased to 11.5%, from 11.1% in April, but it remains below its trailing 12-month average of 12.1%.
  • The median expectation regarding year-ahead change in taxes (at current income level) rose slightly, to 3.0%, which is the highest reading since October 2016.
  • The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now than it is today decreased to 31.5% in May. The series has been on a downward trend since October 2018, and the May reading is its lowest since October 2016.
  • One-year ahead expectations as well as perceptions about households’ current financial situations deteriorated in May, with larger shares of respondents expecting to be and reporting to be worse off financially.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now declined slightly, to 40.8%, from 41.0% in April.
  • Median year-ahead expected growth in government debt declined to 7.0% in May, from 7.5% in April.

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 12 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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