Press Release

Consumer Expectations for Short- and Medium-Term Inflation were at Series Low in October

November 05, 2019

NEW YORK – The Federal Reserve Bank of New York's Center for Microeconomic Data released the October 2019 Survey of Consumer Expectations, which shows short-term inflation expectations have declined to their lowest level since the start of the series in June 2013. The medium-term inflation expectations remained unchanged at the series low. The expected change in the cost of medical care declined and home price growth expectations increased slightly but remained low. The average likelihood of an increase in the average interest rate on savings accounts over the next year continued on its downward trend.  Expectations about household income and spending growth remained stable.

The main findings from the October 2019 Survey are:


  • Median inflation expectation decreased by 0.2 percentage point to 2.3% at the one-year horizon. It is a new low since the start of the series in June 2013. The decline in one-year ahead inflation expectations was more pronounced for respondents above age 40 and those with household incomes above $50,000. In the meanwhile, median three-year ahead inflation expectations remained unchanged at 2.4%, a series low.
  • Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—remained essentially constant for both time horizons.
  • Median expected change in home prices rose to 2.9% in October, after reaching a series low at 2.8% in September.
  • The median one-year ahead expected change in medical care prices decreased by 0.7 percentage point to 6.3%, while expected change in food prices decreased by 0.4 percentage point to 4.1%. In contrast, the median one-year ahead expected cost of college education increased by 0.1 percentage points to 5.8% in October and the expected cost of rent increased by 0.3 percentage point to 5.4%, just above its trailing 12-month average of 5.3%.

Labor Market

  • Median one-year ahead earnings growth expectations slightly decreased to 2.3%, just below its trailing 12-month average of 2.4%. Since December 2018, it has remained between 2.3% and 2.6%.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—slightly decreased in October to 36.8%, below its trailing 12-month average of 37.2%. The decrease was broad-based across age and income groups.
  • The mean perceived probability of losing one's job in the next 12 months rose by 1.4 percentage points to 14.8%. The mean probability of leaving one's job voluntarily in the next 12 months also rose by 2 percentage points to 22.1% in October. Both increases were driven by the respondents with a high school degree or less and those with household incomes below $50,000.
  • The mean perceived probability of finding a job (if one's current job was lost) decreased to 58.8% in October from 60.3% in September.

Household Finance

  • Median expected household income declined slightly to 2.8%, its trailing 12-month average.
  • Median household spending growth expectations were largely unchanged, recording at 3.3% in October.
  • Perceptions of credit access compared to a year ago remained essentially unchanged. Expectations for year-ahead credit availability remained stable as well and indicated smaller dispersion in October. The proportion of respondents expecting improving conditions in credit access declined from 20.6% to 18.4%. The proportion expecting worsening conditions in credit access also declined from 31.7% to 30.2%.
  • The average perceived probability of missing a minimum debt payment over the next three months decreased to 11.6%, which is just below its trailing 12-month average.
  • 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 25.0% in October, its lowest reading since the start of the series in June 2013.
  • Perceptions about households' current financial situations compared to a year ago indicated smaller dispersion, with lower proportions of respondents reporting to be better off or worse off. One-year ahead expectations about households' financial situations, on the other hand, slightly improved.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now decreased by 1 percentage point to 38.8%, remaining below its trailing 12-month average of 40.4%.
  • Median year-ahead expected growth in government debt slightly increased from 8.1% in September to 8.3% in October. The series remained above both its trailing 12-month average of 7.5% and its 2019 average of 7.8%.

Note: Results for the October Survey of Consumer Expectations were released on Tuesday, November 5, instead of Tuesday, November 12, as scheduled due to a premature release of some data.

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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