Press Release

Inflation Expectations Unchanged in March; Labor Market Expectations Retreat Slightly

April 09, 2018

NEW YORK— The Federal Reserve Bank of New York's Center for Microeconomic Data released the March 2018 Survey of Consumer Expectations, which shows no change in short- and medium-term inflation expectations. Consumers were less optimistic about labor market outcomes. In particular, expectations about income growth, the U.S unemployment rate, and the probability of losing one's job all deteriorated slightly in March.

The main findings from the March 2018 Survey are:


  • Median inflation expectations at both the one-year and three-year horizons remained unchanged in March at 2.8% and 2.9%, respectively.
  • Median inflation uncertainty—or the uncertainty expressed by respondents regarding future inflation outcomes—increased slightly at both horizons from last month series' lows.
  • Median home price change expectations increased 0.2 percentage points to 3.5% in March, remaining above its 2017 average of 3.2%. Most of the increase was driven by respondents from the South and Northeast.
  • Commodities price expectations changed relatively little in March. The median one-year ahead expected gasoline price change increased 0.3 percentage points to 4.6%, while the median expected change in food prices increased 0.2 percentage points to 4.5%.
  • Expectations for a change in the cost of college education and medical care declined for the fourth month in a row from 8.0% and 9.7% last November, to 5.9% and 8.8% in March, respectively.

Labor Market

  • Median one-year ahead earnings growth expectations declined slightly, from 2.7% in February to 2.6% in March. The decline was driven by respondents with annual income below $50,000.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—increased 2.1 percentage points to 34.4% in March, but remains below its 2017 average of 35.7%.
  • The mean perceived probability of losing one's job in the next 12 months increased from 12.8% to 13.9%, while the mean probability of leaving one's job voluntarily in the next 12 months declined from 21.4% to 19.3%, its lowest level since July 2013.
  • The mean perceived probability of finding a job (if one's current job was lost) dropped from 59.7% in February to 57.6% in March, slipping below its 2017 average of 58.0%.

Household Finance

  • Median expected household income growth decreased 0.1 percentage points to 2.9% in March. The decrease was most pronounced among younger (less than 40 years old) and lower income (annual income below $50,000) respondents.
  • Median household spending growth expectations improved slightly, from 3.0% in February to 3.1% in March, remaining close to its 2017 average of 3.0%.
  • Households' perceptions about their financial situations improved slightly in March, with the proportion of respondents feeling they are better off than a year ago increasing 0.2 percentage points to 40.4%. In contrast, expectations of households' financial situations worsened, with the proportion of respondents expecting to be worse off financially a year from now increasing 1.7 percentage points to 11.8% in March.
  • The perceived and expected change in credit availability worsened again in March. In particular, the proportion of respondents reporting that credit has become easier to get than 12 months ago declined 3.7 percentage points to 21.7%. Meanwhile the proportion of respondents who expect credit to become easier to get in 12 months declined 3.3 percentage points to 19.4%.
  • The median expectation regarding year-ahead change in taxes (at current income level) increased for the first time since last October to 1.7%, but remains well below its 2017 average of 2.3%.
  • The average perceived probability of missing a minimum debt payment over the next three months has decreased for six consecutive months to 10.7% in March, a new series low. The decline was driven by middle-aged respondents (ages 40-60).
  • The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now than it is today rose for the fifth month in a row to 37.1% in March.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now than they are today declined from 43.0% in February to 42.0% in March, remaining below its trailing 12-month average of 43.4%.
  • Median year-ahead expected growth in government debt declined from 7.5% in February to 7.0% in March, but remains well above its 2017 average of 5.6%.

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 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.

Betsy Bourassa
(212) 720-6885
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