Press Release

Short-Term Inflation Expectations Decline Sharply; Labor Market Expectations Improve

March 13, 2023

NEW YORK—The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the February 2023 Survey of Consumer Expectations, which shows that inflation expectations decreased sharply at the short-term horizon, remained unchanged at the medium-term horizon, and slightly increased at the long-term horizon. Expectations about year-ahead price increases for gas, food, cost of rent, college education, and medical care all declined. Labor market expectations improved, with unemployment expectations and perceived job loss risk decreasing and job finding expectations increasing. Expectations for voluntary job quits reached the highest level since the start of the pandemic. Households’ perceptions and expectations for current and future financial situations both improved.

The main findings from the February 2023 Survey are:


  • Median inflation expectations dropped by 0.8 percentage point at the one-year-ahead horizon to 4.2%, remained unchanged at the three-year-ahead horizon at 2.7%, and increased by 0.1 percentage point at the five-year-ahead horizon to 2.6%. The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) declined at all three horizons.
  • Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—declined at the one- and three-year ahead horizons and remained unchanged at the five-year-ahead horizon.
  • Median home price growth expectations increased by 0.3 percentage point to 1.4% in February, remaining far below the 12-month trailing average of 3.4%. The increase was more pronounced among respondents with annual household incomes above $100k and for those who live in the Northeast Census region.
  • Median year-ahead expected price changes declined by 0.4 percentage point for gas (to 4.7%), 1.7 percentage point for food (to 7.3%), 0.3 percentage point for the cost of medical care (to 9.4%), 1.2 percentage point for the cost of college education (to 8.1%), and 0.2 percentage point for the cost of rent (to 9.4%). All commodity price expectations remain well above their pre-COVID (February 2020) levels.

Labor Market

  • Median one-year-ahead expected earnings growth remained unchanged at 3.0% in February. 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—declined by 1.8 percentage point to 39.4%. The decline 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 0.2 percentage point to 11.8%. The mean probability of leaving one's job voluntarily in the next 12 months increased by 1.7 percentage point to 20.8%, the highest reading of the series since February 2020.
  • The mean perceived probability of finding a job (if one’s current job was lost) increased by 0.3 percentage point to 57.9% in February.

Household Finance

  • Median expected growth in household income decreased by 0.1 percentage point to 3.2%.
  • Median household spending growth expectations decreased to 5.6% in February from 5.7% in January. This is the fourth consecutive decline in the series.
  • Perceptions of credit access compared to a year ago deteriorated in February, with the share of households reporting it is easier to obtain credit than one year ago declining. However, respondents were slightly more optimistic about future credit availability, with the share of households expecting it will be harder to obtain credit a year from now also declining.
  • The average perceived probability of missing a minimum debt payment over the next three months declined by 1.5 percentage point to 10.6% in February. The decline was most pronounced for respondents with no more than a high school education.
  • The median expectation regarding a year-ahead change in taxes (at current income level) decreased by 0.1 percentage point to 4.3%.
  • Median year-ahead expected growth in government debt remained unchanged at 10.2%.
  • The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months increased by 0.1 percentage point to 32.2%.
  • Perceptions about households’ current financial situations improved in February with fewer respondents reporting being worse off than a year ago. Year-ahead expectations about households’ financial situations also improved, with fewer 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 0.7 percentage point to 36.4%.

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.

Ellen Simon
(347) 978-3036
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