Press Release

Consumer Expectations Deteriorate Sharply for the Second Consecutive Month

May 11, 2020

NEW YORK — The Federal Reserve Bank of New York's Center for Microeconomic Data released the April 2020 Survey of Consumer Expectations, which shows considerable deteriorations in households' expectations about most economic outcomes. The perceived probability of losing one's job reached a new series' high for the second consecutive month. Expected earnings, income, and spending growth each reached series' lows. The perceived and expected availability of credit worsened. Median inflation expectations increased slightly at the one-year and three-year horizons, but both uncertainty and disagreement between respondents about future inflation have increased. For the first time since the inception of the survey in 2013, the median respondent expects no increase in home prices over the next 12 months.

The main findings from the April 2020 Survey are:


  • Median inflation expectations increased in April by 0.1 percentage point at the one-year horizon to 2.6% and by 0.2 percentage point at the three-year horizon to 2.6%. Respondents, however, increasingly disagree about the future path of inflation. Our measure of disagreement (the difference between the 75th and 25th percentiles of inflation expectations), increased for the second consecutive month at both horizons (from 5.1% and 4.4% in March to 6.0% and 4.7% in April for one-year and three-year ahead inflation, respectively). Disagreement about one-year ahead inflation reached a new series high in April.
  • Median inflation uncertainty—or the uncertainty expressed by each respondent regarding future inflation outcomes—increased for the third consecutive month at both horizons.
  • For the first time since the inception of the survey, the median one-year ahead expected change in home prices dropped to 0% in April. In fact, 44.2% of respondents expect home prices to decline over the coming year. The decline was broad-based across demographic groups and regions.  
  • After declining for the past 2 months, the median one-year ahead expected change in the price of gasoline rebounded sharply in April, increasing 2.4 percentage points to 4.9%. It indicates that consumers expect gas prices to recover from their recent decline. Similar to last month, the median one-year ahead expected change in rent and in the cost of college declined to new series' lows in April, reaching 4.6% each. In contrast, the expected change in food prices and in the cost of medical care both increased for the second consecutive month from 4.6% and 7.5% in March to 5.4% and 9.3% in April, respectively.

Labor Market

  • Median one-year ahead expected earnings growth decreased for the second consecutive month, from 2.0% in March to 1.8% in April, matching the lowest level ever recorded in the series. The drop was broad-based across all age and income groups.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—retreated slightly from last month's series high of 50.9% to 47.6%. Nevertheless, this month's figure is the second highest reading in the history of the survey.
  • The mean perceived probability of losing one's job in the next 12 months increased 2.4 percentage points to 20.9% in April. This was the second consecutive month in which this expectation has reached a new series high. The mean probability of leaving one's job voluntarily in the next 12 months decreased 2.7 percentage points to 17.3% in April, a new series low. 
  • The mean perceived probability of finding a job in the next three months (if one's current job was lost) plunged 6.1 percentage points to 47.0% in April, marking the largest month-to-month decline recorded since the start of the survey.

Household Finance

  • Median household income growth expectations dropped to 1.9% in April, reaching a new series low. The decrease was almost exclusively driven by respondents between the ages of 40 and 60. Note also that 21.9% of respondents expect that their household income will decrease over the next year.
  • Median household spending growth expectations declined 0.1 percentage points to 2.2% in April, a new series' low. This decrease was driven mostly by respondents between the age of 40 and 60, similar to the decline in median household income growth expectations.
  • Perceptions of credit access compared to a year ago deteriorated sharply in April, with 48.0% of respondents reporting access to credit being harder, as compared to 32.1% in March. Expectations for year-ahead credit availability also deteriorated in April, with 46.7% of respondents expecting that credit will become harder to access, as compared to 38.8% in March.
  • The average perceived probability of missing a minimum debt payment over the next three months increased for the second consecutive month to 16.2% in April, well above its 12-month trailing average of 11.9%.
  • The median expectation regarding a year-ahead change in taxes (at current income level) increased 0.2 percentage point to 2.5% in April, but remained below its 12-month trailing average of 2.6%.
  • The mean perceived probability that the average interest rate on savings accounts will be higher 12 months from now increased 2.2 percentage points to 29.7% in April.
  • Perceptions about households' current financial situations compared to a year ago worsened for the second consecutive month, with 39.2% of respondents reporting to be worse off today than a year ago (versus 30.2% in March). Respondents are also increasingly pessimistic about their year-ahead financial situations with 31.6% of respondents expecting their households to be worse financially a year from now (versus 27.8% in March). 
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now saw a large increase from 47.7% in March to 51.8%, reaching a new series' high.
  • Expectations about the growth in one-year ahead government debt almost doubled from last month's series high of 10.1%, to 19.0% 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 regarding consumers' outlooks. 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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