Press Release

Consumers Expect Further Decline in Medium-Term Inflation Expectations; Home Price Growth Expectations Worsen

October 15, 2019

NEW YORK – The Federal Reserve Bank of New York’s Center for Microeconomic Data released the September 2019 Survey of Consumer Expectations, which shows an uptick in the short-term and a decline in medium-term inflation expectations. Expectations about household income and spending growth remained stable, while expectations about year-ahead credit availability improved. Home price growth expectations retreated for the second month in a row, reaching a new series low. The average expectation of an increase in the average interest rate on savings accounts over the next year continued on its downward trend. 

The main findings from the September 2019 Survey are:


  • Median inflation expectations increased by 0.1 percentage point at the one-year horizon to 2.5%, while median three-year ahead inflation expectations declined by 0.1 percentage point to 2.4% in September. This is the lowest reading for the three-year ahead inflation expectations since the start of the series in June 2013. The decline in the medium-term inflation expectations was driven by the respondents with household incomes less than $50,000 and those with a high school degree or less.
  • Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—showed a slight increase at the one-year horizon.
  • Median home price change expectations declined from 2.9% in August to 2.8% in September, a new series’ low, after remaining at 3.0% from December 2018 to July 2019.
  • The median one-year ahead expected change in gasoline prices increased to 4.4% in September from 4.1% in August. In contrast, the median one-year ahead expected cost of college education, medical care, and rent changed little in September, staying within 0.1 percentage point of the previous month’s expectations.

Labor Market

  • Median one-year ahead earnings growth expectations increased to 2.5% in September, from 2.3% in August, exceeding its trailing 12-month average of 2.4%. The increase was driven by respondents below age 60 and those with at least some college education.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—remain essentially flat at 38.4%, and is now only 2.2 percentage points below its 5-year high reached in January.
  • The mean perceived probability of losing one’s job in the next 12 months decreased to 13.4%, from 14.2% in August, moving further below its trailing 12-month average of 14.3%. The mean probability of leaving one’s job voluntarily in the next 12 months remained stable at 20.1%. 
  • The mean perceived probability of finding a job (if one’s current job was lost) increased to 60.3%, from 60.0% in August.

Household Finance

  • Median expected household income growth increased in September, to 2.9%, from 2.7% in August, moving just above its trailing 12-month average of 2.8%.
  • Median household spending growth expectations were largely unchanged, recording at 3.3% in September. Spending growth expectations have been volatile and are known to exhibit seasonality.
  • Perceptions of credit access compared to a year ago were largely unchanged, while expectations for year-ahead credit availability improved in September. The proportion expecting improving conditions in credit access increased from 17.9% to 20.6%, while the proportion expecting worsening conditions in credit access declined from 33.9% to 31.7%.
  • The average perceived probability of missing a minimum debt payment over the next three months increased to 12.6% from 11.1% in August, exceeding its trailing 12-month average of 11.8%. The increase was broad-based across age and income groups.
  • 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 26.3% in September, continuing its downward trend since December 2018 and reaching its lowest reading since the start of the series in June 2013.
  • Perceptions about households’ current financial situations compared to a year ago indicated larger dispersion, with higher proportions of respondents reporting to be better off and worse off. One-year ahead expectations about households’ financial situations, on the other hand, slightly deteriorated.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now increased to 39.8%, from 38.3% in August.
  • Median year-ahead expected growth in government debt increased from 6.6% in August to 8.1% in September, moving above both its trailing 12-month average of 7.4% and its 2019 average of 7.7%.

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.

Shelley Pitterson
(917) 698-0510
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