Press Release

Modest Improvement in Consumer Expectations

June 08, 2020

NEW YORK — The Federal Reserve Bank of New York's Center for Microeconomic Data released the May 2020 Survey of Consumer Expectations, which shows small signs of improvement in households' expectations compared to April. Consumers grew comparatively more optimistic about labor market outcomes with earnings growth, job finding, and job loss expectations all slightly improving, but remaining far off pre-COVID19 levels. Expected income and spending growth as well as the probability of missing a future minimum debt payment also displayed improvements. On the other hand, perceived and expected availability of credit continued to worsen. Median inflation expectations increased at the one-year horizon and remained stable at the three-year horizon.

The main findings from the May 2020 Survey are:


  • Median inflation expectations at the one-year horizon increased by 0.4 percentage point to 3.0% in May, while median three-year ahead inflation expectations remained unchanged at 2.6%. Our measure of disagreement (the difference between the 75th and 25th percentile of inflation expectations) remained unchanged at the series' high for one-year ahead inflation expectations and continued to increase for the third consecutive month for three-year ahead inflation expectations.
  • Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—increased at the one-year horizon, to a new series' high.
  • Median home price change expectations recovered slightly from its series' low of 0% reached in April to 0.6% in May. The slight increase was driven by respondents who live in the West and Northeast Census regions.
  • Expected year-ahead changes in both food and gasoline prices displayed sharp increases for the second consecutive month and recorded series' highs in May at 8.7% and 7.8%, respectively, in May. Expected year-ahead changes in rent showed a small increase. The median one-year ahead expected change in the cost of a college education remained unchanged at its series' low in May.

Labor Market

  • Median one-year ahead expected earnings growth increased from 1.8% in April to 2.0% in May, remaining below the 12-month trailing average of 2.3%. The increase was driven by lower-income respondents (below $50,000) and those without a college education. Median earnings growth uncertainty also increased slightly in May.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate one year from now will be higher than its current very high level—displayed a significant decline to 38.9% in May, from 47.6% in April and 50.9% in March. This decline was broad-based across age, education, and income groups.
  • The mean perceived probability of losing one's job in the next 12 months declined from 20.9% in April to 18.7% in May, but remained well above its 12-month trailing average of 15.2%. The mean probability of leaving one's job voluntarily in the next 12 months increased from 17.3% in April to 19.1% in May. The increase was largest for respondents without a college degree.
  • The mean perceived probability of finding a job (if one's current job was lost) increased from 47.0% in April to 48.3% in May but remains well below its year-ago level of 61.5%. The increase in May was largest for respondents with household incomes below $50,000.

Household Finance

  • Median year-ahead household income growth expectations increased from 1.9% in April to 2.1% in May, after declining for three consecutive months. However, the median remains considerably below its year-ago level of 2.8% and a quarter of respondents expect a decrease of at least 0.3% in their household incomes over the next 12 months.
  • Median household spending growth expectations increased by 0.7 percentage point to 2.9% in May, while remaining well below its year-ago level of 3.5%. The disagreement (the difference between the 75th and the 25th percentiles) in spending growth expectations reached a series' high in May, pointing to an increased cross-sectional dispersion in expectations, with a quarter of respondents expecting a decline in spending growth of at least 0.8%, and a quarter expecting spending growth of at least 9.6%.
  • Perceptions of credit access compared to a year ago deteriorated for the third consecutive month, with 49.6% of respondents reporting credit to be harder to get today than a year ago (versus 32.1% in March and 48.0% in April). Expectations for year-ahead credit availability also worsened, with fewer respondents expecting credit will become easier to obtain.
  • Perceptions about households' current financial situations compared to a year ago and one-year ahead expectations about households' financial situations both improved slightly, but remain relatively depressed.
  • The average perceived probability of missing a minimum debt payment over the next three months declined sharply from 16.2% to 12.6% in May, just above its 12-month trailing average of 12.3%. The decline was broad-based across age, education, and income groups.
  • The median expectation regarding a year-ahead change in taxes (at current income level) increased from 2.5% in April to 3.0% in May, its highest reading since July 2016.
  • The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now declined from 29.7% in April to 28.2% in May.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now declined from 51.8% in April to 49.6% in May.

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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