from the New York Fed
The New York Fed’s Center for Microeconomic Data released the December 2017 Survey of Consumer Expectations, which shows an increase in short- and medium-term inflation expectations.
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 December 2017 Survey are::
Inflation
Median inflation expectations at the three-year horizon increased from 2.8% in November to 2.9% in December, while at the one-year horizon they rose from 2.6% to 2.8%. The increase was largely driven by respondents under the age of 40.
Median inflation uncertainty—or the uncertainty expressed by respondents regarding future inflation outcomes—increased slightly at both horizons.
The median home price change expectations decreased 0.1 percentage points to 3.2% in December, but it has remained fairly stable over the past six months.
Commodities price expectations changed relatively little in December. The median one-year-ahead expected gasoline price change decreased from 4.3% in November to 4.1% in December, while the median expected change in food prices increased from 4.4% to 4.6%. Expectations for a change in the cost of a college education decreased from 8.0% in November to 7.8% in December.
Labor Market
Median one-year-ahead earnings growth expectations continued to increase, from 2.6% in November to 2.7% in December, a level last reached in November 2014. The increase was driven by respondents between the age of 40 and 60, and respondents with annual income between $50,000 and $100,000.
Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—dipped 0.2 percentage points to 33.5% in December, the lowest level since December 2014.
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 slightly, from 13.5% to 13.8%, and from 21.5% to 21.7%, respectively.
The mean perceived probability of finding a job (if one’s current job was lost) was stable, at 60.0%, remaining above the trailing 12-month average of 57.7%.
