Press Release

Inflation Expectations Mostly Stable; Household Income Growth Expectations Drop

February 13, 2023

NEW YORK—The Federal Reserve Bank of New York's Center for Microeconomic Data today released the January 2023 Survey of Consumer Expectations, which shows little change in inflation expectations at the short-, medium-, and long-term horizons. Similarly, labor and household finance expectations have been mostly stable, with one exception: Households income growth expectations dropped substantially in January but remain above their pre-pandemic levels.

The main findings from the January 2023 Survey are:


  • Median inflation expectations remained unchanged at the year-ahead horizon, decreased by 0.3 percentage point at the three-year-ahead horizon, and increased by 0.1 percentage point at the five-year-ahead horizon, to 5.0%, 2.7% and 2.5%, respectively.*  
  • Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—remained unchanged at the one-year horizon but increased slightly at the three- and five-year horizons.
  • Median home price growth expectations declined by 0.2 percentage point to 1. 1% in January, the second lowest reading since May 2020. The decrease was more pronounced among respondents who are older than 60 and respondents who live in the Northeast.
  • Median year-ahead expected price changes increased by 1.0 percentage point for gas (to 5.1%), 1.4 percentage point for food (to 9.0%), and 0.1 percentage point for the cost of college education (to 9.3%) . The median expected change in the cost of rent and medical care remained unchanged at 9.6% and 9.7% , respectively.

Labor Market

  • Median one-year-ahead expected earnings growth remained unchanged at 3.0% in January. The series has been moving between a narrow range of 2.8% to 3.0% since September 2021.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—increased by 0.4 percentage point to 41.2%. The increase was most pronounced for respondents with a college education and those with annual household incomes above $100k .
  • The mean perceived probability of losing one's job in the next 12 months decreased by 0.6 percentage point to 12.0%. Similarly, the mean probability of leaving one's job voluntarily in the next 12 months decreased by 0.2 percentage point to 19.1%.
  • The mean perceived probability of finding a job (if one's current job was lost) increased by 0.1 percentage point to 57.6% in January.

Household Finance

  • After increasing each month since September of last year, the median expected growth in household income dropped by 1.3 percentage point to 3.3%. This is the largest one-month drop in the nearly ten-year history of the series. The January reading, however, is only slightly below its 12-month trailing average of 3.5%, and the series remains well above its pre-pandemic levels. January's decrease was more pronounced among respondents with no more than a high school education, respondents older than 60, and those with annual household incomes below $50k.
  • Median household spending growth expectations decreased to 5.7% in January from 5.9% in December. This is the third consecutive decline in the series.  
  • Perceptions of credit access compared to a year ago improved in January, with the share of households reporting it is easier to obtain credit than one year agoincreasing. Similarly, respondents were more optimistic about future credit availability, with the share of households expecting it will be easier to obtain credit a year from now also increasing.
  • The average perceived probability of missinga minimum debt payment over the next three monthsincreased to 12.1% in January from 11.4% in December.
  • The median expectation regarding a year-ahead change in taxes (at current income level) increased by 0.3 percentage point to 4.4%.
  • Median year-ahead expected growth in government debt increased by 0.1 percentage point to 10.2%.
  • The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months increased by 0.2 percentage point to 32.1%.
  • Perceptions about households' current financial situations improved in January compared to December, with more respondents reporting they are better off than a year ago. In contrast, year-ahead expectations about households' financial situations deteriorated slightly, with more respondents expecting to be worse off a year from now.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now increased by 0.8 percentage point to 35.7%.

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, this panel allows us to observe the changes in expectations and behavior of the same individuals over time. For further information on the SCE, please refer to an overview of the survey methodology here, the interactive chart guide, and the survey questionnaire.

*Correction: This press release has been updated to include the correct figure for the change in median inflation expectations at the three-year horizon. Median inflation expectations for the three-year-ahead horizon decreased at 0.3 percentage point, not 0.2 percentage point, as initially stated.

Ellen Simon
(347) 978-3036
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