Consumers Expect Lower Household Income, Earnings and Spending Growth
January 11, 2016

The December 2015 Survey of Consumer Expectations (SCE) results indicate that median expected growth in household income, earnings and especially household spending all declined. Labor market expectations are mixed compared to last month: Perceived layoff risk declined, but the perceived likelihood of finding a new job (if one were to lose their job today) also declined, although it remained at the high end of the range recorded since the inception of the survey. Median expected inflation remained flat at the one-year ahead horizon, tying last month’s series low, whereas it increased slightly at the three-year horizon.
The main findings from the December 2015 Survey are:


  • Median inflation expectations remained essentially flat at 2.5 percent at the one-year ahead horizon, tying November’s series low. At the three-year ahead horizon, median expected inflation rose by 0.1 percentage points from last month’s series low, to 2.8 percent.
  • Inflation uncertainty (that is, the uncertainty expressed by respondents regarding future inflation outcomes) declined at both the one-year and the three-year ahead horizons, recording new series lows in both cases.
  • The median expected home price change also declined slightly to 3.0 percent, matching previous series lows recorded in February and August 2015.   The decline was driven in particular by lower income and older respondents.
  • Year-ahead price change expectations for individual spending items all declined slightly.

Labor Market

  • Median one-year ahead earnings growth expectations declined substantially from 2.5 to 2.0 percent (the largest one-month drop since the inception of the survey), returning to levels mostly observed in the second half of 2013. The decline was widespread across all age groups, and especially strong for low education and middle-income workers.
  • The mean perceived probability of losing a job decreased slightly from 14.1 to 13.5 percent – the second lowest reading since the start of the survey. The decline was driven by older, lower education and lower income workers. On the other hand, the mean perceived probability of leaving one’s job voluntarily also declined slightly and is at the lower end of the range observed since the start of the survey.
  • The mean perceived probability of finding a job in the next three months if one were to lose their job today decreased from the November series high to 55.1 percent, but remained at the high end of the range observed since the beginning of the survey.

Household Finance

  • One-year ahead median household income growth expectations declined from 2.6 to 2.3 percent, indicating a continued retreat from the 2.7-2.9 percent range observed in the first nine months of 2015. This decline seems to be driven by younger, higher education and higher income respondents.
  • One-year ahead median household spending growth expectations decreased sharply from 3.6 to 2.9 percent, setting the lowest level since the inception of the survey in June 2013. The decline was particularly strong among older, lower education and lower income respondents.
  • Both the perceived change in credit availability compared to a year ago and one-year ahead credit availability expectations remained essentially unchanged from November.
  • The mean perceived probability of higher average interest rates on savings accounts (one year from now) reached a new series high at 35.1 percent. 

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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