Consumers’ Inflation Expectations Dip
December 11, 2015

NEW YORK—The November 2015 Survey of Consumer Expectations (SCE) recorded the lowest inflation expectations (both short and medium term) since the inception of the survey in June 2013. Median expectations for earnings growth, household income, and household spending all increased in November. Finally, the mean perceived probability of finding a new job within 3 months (if one lost their current job today) increased to a new series high.

Additional results from November 2015 survey include:


  • Median inflation expectations at the one and three year horizons declined by 0.3 and 0.1 percentage points to 2.6% and 2.7%, respectively. The two measures of inflation expectations reached their lowest levels since the inception of the survey in June 2013. This is also the largest one-month drop in short-term inflation expectations recorded in the SCE.  The decline in inflation expectations at the one-year horizon seems driven primarily by respondents with lower education and lower numeracy.
  • Median home price expectations ticked up 0.1 percentage points to 3.2%. The increase seems to be driven by respondents living in the Midwest. Home price uncertainty declined, reaching a new series low at 2.9%.
  • One-year ahead expectations for changes in commodity prices all increased or remained stable, except for gas price expectations, which declined slightly.

Labor Market

  • Median expected earnings growth increased for the second month in a row to 2.5%. The increase was driven mostly by respondents between the age of 40 and 60 and respondents with lower education.
  • The mean probability of leaving one’s job voluntarily declined for the second month in a row, from 21.6% in October to 20.5% in November.
  • After reaching a series low last month, the mean perceived probability of losing one’s job over the next 12 months increased 1.4 percentage point to 14.1% but it remains among the lowest figures recorded. The increase seems to be driven by respondents with lower income and lower numeracy skills.
  • In contrast, the mean perceived probability of finding a new job within 3 months (if one lost their current job today) increased from 54.8% to 57.1%, the highest level recorded since the inception of the survey in June 2013. The increase is generally broad based, except among respondents with a college degree and respondents above the age of 60.

Household Finance

  • After a sharp drop last month, median household income growth expectations rebounded to 2.6%, a 0.2 percentage point increase. The increase was broad based across demographic groups.
  • Median household spending growth expectations also increased 0.1 percentage point to 3.6%, but they remain low compared to the levels recorded in 2014.
  • Perceptions of credit availability relative to one year ago remained stable, while expectations about year-ahead credit availability deteriorated slightly.
  • The average perceived probability of a higher year-ahead interest rate on savings accounts has been following a generally steady positive trend since May 2015 and increased by 0.9 percentage points in November to 31.2%.

About the Survey of Consumer Expectations
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 in expectations for the main outcomes of interest. 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 1,200 household heads. Respondents participate in the panel for up to twelve 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, our panel allows us to observe the changes in expectations and behavior of the same individuals over time.

The survey is conducted on our behalf by The Demand Institute, a non-profit organization jointly operated by The Conference Board and Nielsen. The sampling frame for the SCE is based on that used for The Conference Board’s Consumer Confidence Survey (CCS). Respondents to the CCS, itself based on a representative national sample drawn from mailing addresses, are invited to join the SCE internet panel.

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