Press Release

Consumer Expectations about Household Finances Weaken; Labor Market Expectations Mixed

November 09, 2020

NEW YORK—The Federal Reserve Bank of New York's Center for Microeconomic Data released the October 2020 Survey of Consumer Expectations, which shows a decline in income and spending growth expectations. Changes in labor market expectations were mixed showing declines in both average job loss and job finding expectations. Median inflation expectations declined at the short-term horizon, while remaining unchanged at the medium-term horizon. Uncertainty and disagreement about future inflation decreased slightly but remained at an elevated level.

The main findings from the October 2020 Survey are:


  • Median inflation expectations in October decreased from 3.0% to 2.8% at the one-year horizon and remained unchanged at 2.7% at the three-year horizon. The decline was driven by higher-income respondents (household income above $100,000). Our measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) was unchanged at the one-year horizon but declined at the three-year horizon. Both remain substantially above their 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, which have been trending upward after reaching a series' low of 0% in April 2020, were unchanged at 3.1% in October.
  • The median one-year ahead expected change in the cost of a college education declined from 5.2% to 4.9% in October. Median expectations for the cost of rent and medical care both increased from 5.4% and 6.8% to 5.7% and 9.1% in October, respectively.*

Labor Market

  • Median one-year ahead expected earnings growth remained unchanged at 2.0% in October, for the third consecutive month. The series remains well below its 2019 average level of 2.4%.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—decreased from 36.4% in September to 35.4% in October, its third consecutive decline. The decline was driven by respondents without a college education.
  • The mean perceived probability of losing one's job in the next 12 months decreased from 16.6% in September to 15.5% in October, remaining above its pre-COVID-19 reading of 13.8% in February. This month's decline was more pronounced among respondents with more than a high school education and those with household incomes above $50,000. The mean probability of leaving one's job voluntarily in the next 12 months declined substantially from 20.3% in September to 17.8% in October. The decrease was broad-based across demographic groups.
  • The mean perceived probability of finding a job (if one's current job was lost) declined from 49.9% in September to 46.9% in October, its lowest reading since April 2014. The decline was broad based across education and income groups. The series remains well below its 2019 average of 59.9% and its February 2020 level of 58.7%.

Household Finance

  • Median expected household income growth decreased by 0.3 percentage point to 2.1% in October. Since February, this series has moved within a narrow range from 1.9% to 2.3%, well below its 2019 average of 2.8%. The decrease was driven by respondents without a college education.
  • Median household spending growth expectations decreased from 3.4% in September to 3.1% in October, which was the same as its February 2020 level.
  • Expectations for year-ahead credit availability deteriorated in October, with more respondents expecting credit to become more difficult to obtain.
  • The average perceived probability of missing a minimum debt payment over the next three months decreased from 10.7% in September to 9.3% in October, remaining below its 2019 average of 11.5%.
  • The median expectation regarding a year-ahead change in taxes (at current income level) declined from 3.0% in September to 2.9% in October.
  • The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now declined from 27.6% in September to 24.3% in October, a new series low.
  • Perceptions about households' current financial situations compared to a year ago were largely unchanged, while one-year ahead expectations about households' financial situations deteriorated slightly with fewer respondents expecting their financial situation to improve and more respondents expecting their financial situation to worsen.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now decreased 3.3 percentage points to 40.8% in October, its lowest monthly reading this year.

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.

* Due to a data recording error in the “one-year ahead commodity price change expectations” series, the data for this series has been revised going back to October 2020.

Shelley Pitterson
(917) 698-0510
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