Press Release

Continued Gradual Improvement in Consumer Expectations

July 13, 2020

NEW YORK—The Federal Reserve Bank of New York's Center for Microeconomic Data released the June 2020 Survey of Consumer Expectations, which shows continued gradual declines in pessimism about household financial conditions. While consumers overall remain less optimistic about earnings growth, income growth, and job finding expectations compared to the pre-COVID-19 environment, some indicators showed considerable improvements in June. Home price growth expectations increased and the average probability of missing a future minimum debt payment reached a new series' low. Median inflation expectations decreased at both the one-year and three-year horizons. Uncertainty and disagreement about future inflation declined as well.

The main findings from the June 2020 Survey are:


  • Median inflation expectations at the one-year horizon declined from 3.0% in May to 2.7% in June, and decreased at the three-year horizon to 2.5% in June from 2.6% in May. The decline at the one-year horizon was broad-based across age and education groups. Our measure of disagreement (the difference between the 75th and 25th percentile of inflation expectations) declined at both horizons but remains above pre-COVID-19 levels.
  • Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—decreased at both horizons but remains elevated relative to pre-COVID-19 readings.
  • Median home price change expectations continued its recent rebound from a series' low of 0% reached in April 2020, increasing from 0.6% in May to 2.0% in June. Despite the recent rise, the median expected home price change remains well below its 2019 and early 2020 readings of around 3.0%.The increase was broad-based across demographic groups and census regions.
  • The median one-year ahead expected change in the price of gasoline increased from 8.7% in May to 9.0%, a new series' high. Conversely, the median expected change in food prices declined from a series' high of 7.8% reached in May to 5.9% in June, remaining well above its trailing 12-month average of 4.6%. Median expected changes in the cost of medical care declined from 9.4% to 8.6%, while the median expected change in rent and the cost of a college education increased from 4.9% and 4.6% in May to 5.3% and 5.0% in June, respectively.

Labor Market

  • Median one-year ahead expected earnings growth declined from 2.0% in May to 1.6% in June, well below the 12-month trailing average of 2.3%. The June reading is a new series' low. The decline was largest for lower-income (below $50,000) respondents and those without a college education.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—decreased to 35.1% in June, from 38.9% in May, its third consecutive decline since reaching a series high of 50.9% in March. The current reading is now just above the February level of 34.2%.
  • The mean perceived probability of losing one's job in the next 12 months declined 3.6 percentage points to 15.0% in June, it lowest value since reaching 13.8% in February. The decline was broad-based across education and income groups. The mean probability of leaving one's job voluntarily in the next 12 months decreased from 19.1% in May to 19.0% in June.
  • The mean perceived probability of finding a job (if one's current job was lost) decreased from 48.3% in May to 47.6% in June, remaining well below its year-ago level of 63.7%.

Household Finance

  • Median expected household income growth remained steady at 2.1% in June remaining well below its year-ago level of 2.9%.
  • Median household spending growth expectations decreased 0.1 percentage point to 2.8% in June, remaining well below its year-ago level of 3.3%.
  • Perceptions of credit access compared to a year ago and expectations for year-ahead credit availability both improved slightly, with fewer respondents reporting or expecting credit to be harder to obtain. Nevertheless, both measures continue to indicate reduced credit availability compared to early 2020.
  • The average perceived probability of missing a minimum debt payment over the next three months declined again in June to 9.8% from 12.6% in May and 16.2% in April. The June reading is a new series' low. The decline in June was broad-based across age, education and income groups.
  • The median expectation regarding a year-ahead change in taxes (at current income level) decreased from 3.0% in May to 2.7% in June.
  • The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now decreased to 27.9% in June, from 28.2% in May.
  • Perceptions about households' current financial situations compared to a year ago improved, with fewer respondents reporting to be worse off. Similarly, one-year ahead expectations about households' financial situations also improved with fewer respondents expecting their financial situation to worsen and more expecting it to improve. While improved relative to readings from March to May, perceptions and expectations of financial conditions remain weaker compared to pre-COVID-19 readings.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now decreased for the second consecutive month to 47.2% in June from 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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