Press Release

Short-Term Inflation Expectations Decline Further; Households Become Slightly More Pessimistic About Credit Conditions

June 12, 2023

NEW YORK—The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the May 2023 Survey of Consumer Expectations, which shows that inflation expectations declined at the short-term horizon to their lowest level in two years, while they increased slightly at the medium- and longer-term horizons. Labor market expectations were mixed with expected earnings growth declining, and unemployment expectations and perceived job loss risk improving. Households' perceptions and expectations for credit conditions and their own financial situations all deteriorated slightly.

The main findings from the May 2023 Survey are:


  • Median inflation expectations declined by 0.3 percentage point at the one-year-ahead horizon to 4.1%, the lowest reading since May 2021. In contrast, median inflation expectations increased by 0.1 percentage point at the three- and five-year-ahead horizons to 3.0% and 2.7%, respectively. The survey's measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) increased at the one- and three-year-ahead horizons and remained unchanged at the five-year-ahead horizon.
  • Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—declined across all three horizons.
  • Median home price growth expectations increased for the fourth consecutive month from 2.5% in April to 2.6% in May, the highest reading since July 2022. The increase was more pronounced among respondents with household income above $100k and those who live in the West Census regions.
  • Median year-ahead expected price changes declined by 0.7, 0.4, 0.1 and 0.1 percentage points for the cost of college education (to 7.1%), food (to 5.4%), medical care (to 9.2%), and rent (to 9.1%), respectively. Median year-ahead expected price changes remained unchanged for gas (at 5.1%).

Labor Market

  • After staying unchanged at 3.0% for five consecutive months, median one-year-ahead expected earnings growth declined to 2.8%. The series has been moving within a narrow range of 2.8% to 3.0% since September 2021. The decline in expected earnings was more pronounced among respondents with no more than a high school education.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—decreased by 1.8 percentage points to 40.0%, slightly below its 12-month trailing average of 40.6%.
  • The mean perceived probability of losing one's job in the next 12 months decreased by 1.3 percentage points to 10.9%, the lowest reading since April 2022 and only 0.1 percentage point above the series low. The mean probability of leaving one’s job voluntarily in the next 12 months decreased as well, by 0.5 percentage point, to 19.1%.
  • The mean perceived probability of finding a job (if one's current job was lost) increased from 55.2% in April to 56.4% in May. The increase was most pronounced for respondents with a household income between $50k and $100k.

Household Finance

  • Median expected growth in household income increased by 0.2 percentage point to 3.3%, remaining below the series 12-month trailing average of 3.6%.
  • Median household spending growth expectations rebounded from 5.2% in April to 5.6% in May, below its 12-month trailing average of 6.7%.
  • Perceptions of credit access compared to a year ago deteriorated slightly in May. The share of households reporting that it is more difficult to obtain credit now than a year ago increased, while the share reporting that it is easier declined. Similarly, respondents’ views about future credit availability deteriorated slightly. The share of respondents expecting tighter credit conditions a year from now increased, while the share expecting looser credit conditions declined.
  • The average perceived probability of missing a minimum debt payment over the next three months increased by 0.7 percentage point to 11.3% in May, remaining just below the series 12-month trailing average of 11.4%. The increase was largest for respondents below the age of 40 with no more than a high school education, and those with a household income below $50k.
  • The median expectation regarding a year-ahead change in taxes (at current income level) decreased by 0.2 percentage point to 4.1%.
  • Median year-ahead expected growth in government debt decreased for the third consecutive month from 9.8% to 9.7% in May, the lowest reading since February 2020.
  • The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months decreased by 1.7 percentage points to 30.3%, the lowest reading since December 2021.
  • Perceptions about households' current financial situations deteriorated in May with more respondents reporting being worse off than a year ago and fewer respondents reporting being better off. Similarly, year-ahead expectations deteriorated with fewer respondents expecting to be better off a year from now and more respondents expecting to be worse off.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now decreased by 1.5 percentage point to 34.3%.

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.

Betsy Bourassa
(212) 720-6885
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