Press Release

Consumers’ Expectations Improve Slightly But Remain Weak

September 14, 2020

NEW YORK—The Federal Reserve Bank of New York's Center for Microeconomic Data released the August 2020 Survey of Consumer Expectations, which shows a continued decline in pessimism about households' financial situation. In particular, home price growth expectations returned to levels close to a year ago, while delinquency expectations remain low. However, year-ahead spending, household income and labor market expectations all remain weak compared to the pre-COVID-19 period. Median inflation expectations increased at both the short and medium-term horizons, while uncertainty and disagreement about future inflation remain elevated.

The main findings from the August 2020 Survey are:


  • Median inflation expectations increased 0.1 percentage point in August to 3.0% at the one-year horizon and increased 0.3 percentage point to 3.0% at the three-year horizon. The increase was driven mostly by respondents above the age of 40. Our measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) remained substantially above its pre-COVID-19 level at both horizons.
  • Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—increased for the second consecutive month at both horizons and remains elevated relative to pre-COVID-19 readings.
  • Median home price change expectations continued its rebound from a series' low of 0% reached in April 2020, increasing from 2.0% in July to 2.8% in August, and inching closer to its 2019 average of 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 5.4% to 5.6% in August, while median expectations for the cost of a college education and rent both increased by 0.3 and 0.1 percentage points to 5.1% and 5.5%, respectively. In contrast, the median expected change in the cost of medical care declined from 9.1% to 8.3%, but remained elevated, compared to its 2019 average of 7.2%. Expected changes in food prices remain unchanged at 5.4%

Labor Market

  • Median one-year ahead expected earnings growth remained flat at 2.0% in August, below its 2019 average level of 2.3%.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—decreased slightly from 39.3% in July to 39.1% in August.
  • The mean perceived probability of losing one's job in the next 12 months increased for the second consecutive month from 16.0% in July to 18.0% in August, well above its February reading of 13.8%. The increase was more pronounced among respondents without a college education and those with a household income below $50,000. The mean probability of leaving one's job voluntarily in the next 12 months increased 0.8 percentage point to 19.7% in August.
  • The mean perceived probability of finding a job (if one's current job was lost) increased for the second consecutive month from 48.9% in July to 50.7% in August, but remained well below its 2019 average of 59.9%.

Household Finance

  • Median expected household income growth increased by 0.1 percentage point to 2.2% in August, remaining well below its 2019 average of 2.8%. The increase was driven mostly by respondents below the age of 40.
  • Median household spending growth expectations remained steady at 3.0% in August, below its 2019 average of 3.2%.
  • Perceptions of credit access compared to a year ago and expectations for year-ahead credit availability both deteriorated in August, with more respondents reporting or expecting difficulties in obtaining credit.
  • The average perceived probability of missing a minimum debt payment over the next three months increased slightly from last month series' low of 9.5% to 9.7% in August. This new reading remains well below its 2019 average of 11.5%.
  • The median expectation regarding a year-ahead change in taxes (at current income level) decreased from 3.0% in July to 2.7% in August, thereby returning to its 2019 average.
  • The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now increased to 28.0% in August, from 27.4% in July.
  • Perceptions about households' current financial situations compared to a year ago improved slightly, with more respondents reporting being better off. Similarly, one-year ahead expectations about households' financial situations also improved with more respondents expecting their financial situation to improve.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now increased 0.6 percentage points to 44.9% in August.

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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