from the New York Fed

The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the January 2018 Survey of Consumer Expectations, which shows continued improvement in expectations about households’ year-ahead financial situation and credit availability, and robust expected earnings growth. Short- and medium-term inflation expectations fell slightly.

Expectations about income and spending growth decreased, but expectations about household financial situations and credit availability improved. Labor market expectations continued to improve, with expectations about earnings growth and unemployment reaching levels not seen since late 2014.

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The main findings from the January 2018 Survey are:

Inflation

  • Median inflation expectations declined by 0.1% at both the one-year and three-year horizon, to 2.7% and 2.8% in January respectively. The decline was driven by lower income (below $50,000) respondents.
  • Median inflation uncertainty—or the uncertainty expressed by respondents regarding future inflation outcomes—declined at both horizons.
  • Median home price change expectations increased from 3.2% in December to 3.5% in January, its highest reading since May 2017 and well above its trailing 12-month average of 3.2%.
  • The median one-year ahead expected gasoline price change increased from 4.1% in December to 4.3% in January, while expectations for changes in food prices declined from 4.6% to 4.3%. Expectations for changes in the cost of medical care decreased from 9.5% to 9.2%.

    • Labor Market

  • Median one-year ahead earnings growth expectations increased slightly, reaching a new series’ high. Median earnings growth uncertainty increased to a level last seen in August 2016.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—decreased slightly from 33.5% in December to 32.4% in January, a new series’ low.
  • 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 increased from 13.8% to 14.9%, and 21.7% to 22.1%, respectively.
  • The mean perceived probability of finding a job (if one’s current job was lost) declined slightly from 60.0% in December to 59.7%, falling just 0.4% below its series’ high reached in November 2017.
  • The mean probability of changing residence over the next 12 months, which has been falling gradually since reaching 21.4% in November 2013, declined to a new low of 15.9% in January.
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