NEW YORK—Results from the April 2016 Survey of Consumer Expectations (SCE) show an increase in income and spending growth expectations. At the same time, labor market expectations deteriorated slightly, with the mean perceived probability of finding a job declining and the mean perceived probability of losing a job increasing. Inflation expectations increased but remain relatively low.

The main findings from the April 2016 Survey are:

Inflation

• Median inflation expectations increased at both the one-year horizon (from 2.5 percent in March to 2.6 percent in April) and the three-year ahead horizon (from 2.5 percent in March to 2.8 percent in April), but remain relatively low. Inflation expectations at both horizons increased across all education levels.
• Median inflation uncertainty (that is, the uncertainty expressed by respondents regarding future inflation outcomes) increased substantially at both the one-year and the three-year ahead horizons, retreating from their series lows.
• Median home price expectations increased by 0.1 percentage point in April to 3.1 percent, but remain below the series’ average. The increase was broad-based across education and income levels and across geographic regions.
• Median one year ahead gasoline price expectations declined slightly, from 7.3 percent in March to 6.9 percent in April, but remain well above the series’ average.
• Expectations for changes in the prices of medical care, college education, and food also rose slightly, while expectations of rent price changes fell slightly.

Labor Market

• Median one-year ahead expected earnings growth remained relatively stable, falling slightly from 2.5 percent to 2.4 percent.
• Mean unemployment expectations (that is, the mean probability that the U.S. unemployment rate will be higher one year from now), increased from 37.4 percent in March to 39.3 percent in April, returning to late 2013 levels. Unemployment expectations have been trending upwards since January 2015. The increase was consistent across all age, education and income groups.
• The mean perceived probability of losing one’s job in the next 12 months increased noticeably from 14.4 percent in March to 15.8 percent in April, a level not seen since late 2014. On the other hand, the mean probability of leaving one’s job voluntarily in the next 12 months also increased from 20.0 percent to 23.1 percent, a new series high. Both increases were fairly broad-based across demographic groups.
• The mean perceived probability of finding a job (if one’s current job were lost) decreased from 54.3 percent in March to 52.9 percent in April, also a level not seen since the end of 2014. This decrease was most pronounced among younger and lower income respondents.

Household Finance

• Median expected household income growth increased from 2.6 percent in March to 2.8 percent in April, returning to readings recorded during the first three quarters of 2015. The increase was driven by middle and higher income respondents. Income growth expectations have been trending upward since January.
• Median household spending growth expectations rose slightly from 3.4 percent in March to 3.5 percent in April, and was similarly driven by middle and higher income respondents.
• Respondents were slightly more pessimistic about perceived (over the past 12 months) and expected (over the coming 12 months) credit availability.
• The average perceived probability of missing a minimum debt payment over the next three months increased slightly from 11.5 percent in March to 12.4 percent in April.
• The mean perceived probability of a higher average year-ahead interest rate on savings accounts increased from 28.4 percent in March to 30.0 percent in April, about the same level as 12 months ago.

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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