2-Year NY FED Inflation Expectations Lowest Since 2013

The NY Fed Inflation Expectations survey which was released a while ago, showed 3-year inflation at 2.3%, the lowest in 11 years, indicating mixed sentiment among US consumers. While inflation expectations remain anchored in the short (1-year) and long term (5-year), concerns are rising in other areas, particularly around household finance and credit access. The labor market shows signs of cooling, but uncertainty remains, suggesting cautious optimism with underlying apprehensions about future economic conditions.

The New York Fed Survey of Consumer Inflation Expectations for July 2024

Inflation Expectations:

• The NY Fed survey revealed that the median one- and five-year-ahead inflation expectations remained steady at 3.0% and 2.8%, respectively.
• The median three-year-ahead inflation expectations dropped sharply by 0.6 percentage points to 2.3%, marking the lowest level since the survey began in June 2013.
• The decline in three-year inflation expectations was most notable among those with a high-school education or less and individuals with an annual household income under $50,000.
• Five-year inflation expectations remained unchanged at 2.8%.
• Disagreement among respondents decreased at both the one- and five-year horizons and stayed the same at the three-year horizon.
• Median inflation uncertainty remained consistent across all time frames.
• Expectations for median home price growth held steady at 3.0%.
• Year-ahead commodity price expectations decreased for gas (down 0.8 percentage points to 3.5%) and food (down 0.1 percentage points to 4.7%), but increased for medical care (up 0.2 percentage points to 7.6%), college education (up 1.9 percentage points to 7.2%), and rent (up 0.6 percentage points to 7.1%).

Labor Market:

• The median one-year-ahead expected earnings growth decreased by 0.3 percentage points to 2.7%.
• The mean unemployment expectations fell by 1.0 percentage point to 36.6%.
• The mean perceived probability of losing one’s job in the next 12 months dropped by 0.5 percentage points to 14.3%.
• The mean probability of voluntarily leaving one’s job increased by 0.2 percentage points to 20.7%, the highest since February 2023.
• The mean perceived probability of finding a new job if current employment was lost decreased by 0.9 percentage points to 52.5%.

Household Finance:

• The median expected growth in household income remained stable at 3.0%.
• Median household spending growth expectations decreased by 0.2 percentage points to 4.9%, the lowest since April 2021.
• Perceptions of credit access worsened, with more households finding it harder to obtain credit compared to a year ago. However, expectations for future credit availability improved.
• The average perceived probability of missing a minimum debt payment over the next three months rose by 1.0 percentage points to 13.3%, the highest since April 2020.
• Median expectations regarding year-ahead tax changes decreased by 0.3 percentage points to 4.0%.
• Median year-ahead expected growth in government debt remained constant at 9.3%.
• The mean perceived probability that average interest rates on savings accounts will be higher in 12 months decreased by 0.2 percentage points to 25.1%.
• Perceptions of households’ current financial situations showed slight improvement, while year-ahead financial expectations worsened.
• The mean perceived probability that U.S. stock prices will be higher in 12 months increased marginally by 0.1 percentage points to 39.3%.

ABOUT THE AUTHOR See More

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

Fed to Launch “Skinny Master Accounts” for Crypto and Fintech by Year-End

1 month ago

Save

No Federal Reserve Interest Rate Cuts Until Powell Leaves, Dow Jones Holds the Uptrend Firm!

1 month ago

Save

Forex Signals Jan 26: FED Decision This Week, Earnings from Tesla, Apple, MSFT, UNH, Meta, GM, Visa, IBM

2 months ago

Save