Press Release

The Gradual Improvement in Consumer Expectations Halted in July

August 10, 2020

NEW YORK—The Federal Reserve Bank of New York's Center for Microeconomic Data released the July 2020 Survey of Consumer Expectations, which shows that household expectations regarding their employment prospects and their year-ahead financial situation slightly deteriorated in July after two months of gradual improvement. Other indicators, such as the expected growth in home price and in household income, remained steady at a considerably higher level than in March and April, but below their pre-COVID-19 levels. Median inflation expectations increased 0.2 points at the one-year and three-year horizons, respectively, while disagreement about future inflation also increased.

The main findings from the July 2020 Survey are:


  • Median inflation expectations increased at the one-year horizon from 2.7% in June to 2.9% in July, above its 12 month trailing average of 2.5%. Similarly, median inflation expectations at the three-year horizon increased from 2.5% in June to 2.7% in July. At both horizons, the increase was driven by respondents below age 40. Our measure of disagreement (the difference between the 75th and 25th percentile of inflation expectations) also increased at both horizons in July.
  • Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—slightly increased at the one-year horizon, and remained steady at the three-year horizon. Uncertainty at both horizons remains elevated relative to pre-COVID-19 readings.
  • The median expected year-ahead home price change remained steady at 2.0%. Although the July reading affirms the rebound from a series' low of 0% reached in April 2020, it remains well below the 2019 average of 3.0%. The median expected home price change decreased in July among respondents with household incomes below $50,000, while it increased among respondents with higher incomes.
  • The median one-year ahead expected change in the price of gasoline decreased sharply to 5.4% in July, after reaching a series' high of 9% in June. The median expected change in food prices declined from 5.9% in June to 5.4% in July, but remained above its average of 4.4% in 2019. Median expected changes in the cost of medical care increased in July from 8.6% to 9.1%.

Labor Market

  • Median one-year ahead expected earnings growth increased to 2.0% in July, from a series' low of 1.6% in June. It remains well below the 2019 average of 2.4%. The increase was largest for respondents above age 60.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—started increasing again in July after three consecutive months of decline since reaching a series high of 50.9% in March. From 35.1% in June, it went up to 39.3% in July.
  • The mean perceived probability of losing one's job in the next 12 months rose from 15.0% in June to 16.0% in July, above its 2019 average of 14.3% and its year-ago value of 13.8%. The mean probability of leaving one's job voluntarily in the next 12 months was steady in July at 18.9%, below its 2019 average of 21.0%.
  • The mean perceived probability of finding a job (if one's current job was lost) slightly increased from 47.6% in June to 48.9% in July, remaining well below its average level in 2019 of 59.9%.

Household Finance

  • Median expected household income growth remained steady at 2.1% in July for the second consecutive month, which is well below its 2019 average of 2.8%. Median household spending growth expectations increased 0.2 percentage point to 3.0% in July, but remained below its 2019 average of 3.2%. Both expected growths in household income and spending decreased among respondents under age 40 while they increased among older respondents.
  • Perceptions of credit access compared to a year ago and expectations for year-ahead credit availability became more dispersed in July, with both more respondents reporting or expecting credit to be harder to obtain and more respondents reporting or expecting credit to be easier to obtain. The two measures continue to indicate reduced credit availability compared to the pre-COVID-19 levels.
  • The average perceived probability of missing a minimum debt payment over the next three months decreased for the fourth consecutive month, from 9.8% in June to 9.5% in July. The July reading is a new series low. However, the perceived probability of missing a minimum debt payment increased in July for those under age 40.
  • The median expectation regarding a year-ahead change in taxes (at current income level) increased from 2.7% in June to 3.0% in July.
  • The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now decreased from 27.9% in June to 27.4% in July.
  • Perceptions about households' current financial situations compared to a year ago in July remained close to their June readings. In contrast, one-year ahead expectations about households' financial situations deteriorated with more respondents expecting their financial situation to worsen and fewer expecting it to improve. Both perceptions and expectations of financial conditions remain weak 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 third consecutive month to 44.3% in July from 47.2% in June.

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
By continuing to use our site, you agree to our Terms of Use and Privacy Statement. You can learn more about how we use cookies by reviewing our Privacy Statement.   Close