The main findings from the October 2018 Survey are:
Inflation
- Median inflation expectations at both the one-year and three-year horizons were unchanged at 3.0% in October. Inflation expectations at both horizons have been very stable over the past 6 months.
- Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—similarly remained unchanged at the one-year horizon and declined slightly at the three-year horizon.
- Median home price change expectations declined from 3.6% in September to 3.3% in October, its fourth consecutive decline since reaching 3.9% in June and falling below its trailing 12-month average of 3.5%.
- Expectations for changes in the cost of a college education and of medical care each decreased, with the former dropping from 7.0% in September to 5.9% in October, and the latter decreasing from 9.2% in September to 7.8% in October, its lowest value since May 2015.
Labor Market
- Median one-year ahead earnings growth expectations fell from 2.8% in September to 2.5% in October, just below its trailing 12-month average of 2.6%. The decline was most pronounced among younger (below age 40) and lower educated (high school degree or less) respondents.
- Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—increased 1.1 percentage points to 35.1% in October.
- The mean perceived probability of losing one’s job in the next 12 months fell from 16.0% in September to 13.5%, its lowest reading since February 2018, while the mean probability of leaving one’s job voluntarily in the next 12 months also decreased from 23.4% to 20.8%, falling just below its trailing 12-month average of 21.6%.
- The mean perceived probability of finding a job (if one’s current job was lost) decreased slightly from 59.3% in September to 58.7%, and is just 0.1 percentage points below its 2018 average.
Household Finance
- Median expected household income growth increased notably from 2.5% in September to 2.9% in October. The increase was broad based across age and income groups.
- Median household spending growth expectations also increased notably from 2.9% in September to 3.7% in October, its highest reading since December 2016. The increase was also broad based across age and income groups.
- The perceived change in credit availability was mixed in October. The proportion of respondents reporting that credit has become easier to get compared to 12 months ago increased 1.7 percentage points to 26.6%. Meanwhile, the proportion of respondents who found credit to become harder to get compared to 12 months ago also increased 1.4 percentage points to 28.3% (the highest level over the past 12 months). Expectations for year-ahead credit availability improved, with a slightly higher proportion expecting improved conditions.
- The average perceived probability of missing a minimum debt payment over the next three months decreased from 13.7 % in September to 12.7% in October, remaining close to its trailing 12-month average of 12.2%.
- The median expectation regarding year-ahead change in taxes (at current income level) declined slightly to 2.4%, remaining well above its trailing 12-month average of 2.1%.
- The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now than it is today increased from 36.8% in September to 38.4% in October, its highest reading since April 2017.
- One-year ahead expectations as well as perceptions about households’ current financial situations improved in October, with slightly higher proportions of respondents expecting to be and feeling better off financially.
- The mean perceived probability that U.S. stock prices will be higher 12 months from now than they are today remained stable at 41.6%.
- Median year-ahead expected growth in government debt decreased from 7.1% in September to 6.4% in October
About the Survey of Consumer Expectations (SCE)
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.
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.
