August 2017 Consumer Expectations: Show Mainly Stable Outlook

from the New York Fed

Results from the August 2017 Survey of Consumer Expectations show a mainly stable outlook. Inflation expectations were unchanged at the one-year horizon and decreased slightly at the three-year horizon.

Employment and wage growth expectations signal continued strength of the labor market, while consumers’ expectations of year-ahead increases in taxes continue to rise.

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The main findings from the August 2017 Survey are:

Inflation

Median inflation expectations were unchanged at the one-year horizon (at 2.5%), and decreased slightly at the three-year horizon (from 2.7% in July to 2.6% in August).

Median inflation uncertainty—or the uncertainty expressed by respondents regarding future inflation outcomes—was unchanged at the one-year horizon but declined to a series low at the three-year horizon.

Median home price change expectations increased slightly from 3.2% in July to 3.3% in August, which is in line with the average over the past year. Home price change uncertainty declined to its lowest level since February 2015.

The median one-year ahead expected gasoline price change increased from 3.0% in July to 4.1% in August, while expectations for changes in food prices and the cost of a college education increased from 4.3% to 4.6% and from 6.0% to 6.7%, respectively.

Labor Market

Median one-year ahead earnings growth expectations decreased slightly from 2.6% in July to 2.5% in August, but remain well above the trailing 12-month average 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 to 35.4%, the lowest level since February 2015.

Both the mean perceived probability of losing one’s job in the next 12 months and the mean probability of leaving one’s job voluntarily in the next 12 months were essentially unchanged.

The mean perceived probability of finding a job (if one’s current job was lost) increased from 57.1% to 58.3%, close to its series high of 59.3%, reached in March of this year. The increase was largest for lower-education (with a high school degree or less) and lower-income (below $50,000 household income) respondents.