NEW YORK—Results from the August 2017 Survey of Consumer Expectations show a mainly stable outlook. Inflation expectations were unchanged at the one-year horizon and decreased slightly at the three-year horizon. Employment and wage growth expectations signal continued strength of the labor market, while consumers’ expectations of year-ahead increases in taxes continue to rise.
The main findings from the August 2017 Survey are:
Inflation
- Median inflation expectations were unchanged at the one-year horizon (at 2.5%), and decreased slightly at the three-year horizon (from 2.7% in July to 2.6% in August).
- Median inflation uncertainty—or the uncertainty expressed by respondents regarding future inflation outcomes—was unchanged at the one-year horizon but declined to a series low at the three-year horizon.
- Median home price change expectations increased slightly from 3.2% in July to 3.3% in August, which is in line with the average over the past year. Home price change uncertainty declined to its lowest level since February 2015.
- The median one-year ahead expected gasoline price change increased from 3.0% in July to 4.1% in August, while expectations for changes in food prices and the cost of a college education increased from 4.3% to 4.6% and from 6.0% to 6.7%, respectively.
Labor Market
- Median one-year ahead earnings growth expectations decreased slightly from 2.6% in July to 2.5% in August, but remain well above the trailing 12-month average of 2.3%.
- Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—decreased slightly to 35.4%, the lowest level since February 2015.
- 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 were essentially unchanged.
- The mean perceived probability of finding a job (if one’s current job was lost) increased from 57.1% to 58.3%, close to its series high of 59.3%, reached in March of this year. The increase was largest for lower-education (with a high school degree or less) and lower-income (below $50,000 household income) respondents.
Household Finance
- Median expected household income growth retreated from a series high of 3.0% in July to 2.7% in August. The decline was driven by respondents under the age of 40.
- Median household spending growth expectations increased from 2.8% in July to 3.0% in August, but remain below the trailing 12-month average of 3.2%. The increase was driven by lower-education and lower-income respondents.
- Both the perceived change in credit availability compared to a year ago and year-ahead expected credit availability deteriorated slightly in August.
- The average perceived probability of missing a minimum debt payment over the next three months increased from 12.2 % in July to 12.9% in August, but remains below the trailing 12-month average of 13.3%.
- The median expectation regarding year-ahead change in taxes (at current income level) rose slightly from 2.4% in July to 2.6% in August, marking the third increase since May 2017.
- The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now than it is today increased slightly from 34.0% in July to 34.4% in August.
- One-year-ahead expectations of the household’s financial situation improved slightly, with 42.3% of respondents expecting to be better off financially, compared to 41.4% in July and 37.4% a year ago.
- The mean perceived probability that U.S. stock prices will be higher 12 months from now than they are today increased modestly from 41.7% in July to 43.1% in August.
- Median year-ahead expected growth in government debt increased slightly from 4.9% in July to 5.2% in August, close to the trailing 12-month average of 5.4%.
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 1,300 household heads. Respondents participate in the panel for up to 12 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.
