Press Release

Inflation Expectations Decline in August; Consumers Less Optimistic about Household Financial Situation and Economy

September 09, 2019

NEW YORK—The Federal Reserve Bank of New York’s Center for Microeconomic Data released the August 2019 Survey of Consumer Expectations, which shows a decline in short- and medium-term inflation expectations. Expectations for one year ahead inflation, home prices changes, and changes in the price of medical care and rent all reached new series lows. Expectations about employment, growth in earnings, spending, income, and household financial situation were generally less optimistic.

The main findings from the August 2019 Survey are:


  • Median inflation expectations declined by 0.2 percentage point at the one-year horizon to 2.4% (a new series low), and by 0.1 percentage point at the three-year horizons to 2.5% in August.
  • Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—remained unchanged for both horizons.
  • Median home price change expectations declined by 0.1 percentage point to a new series low of 2.9% in August. This is the first decline since December 2018, after eight consecutive readings of 3.0%. The decline was most pronounced among respondents over the age of 60, with higher education (at least a bachelor’s degree), earning higher incomes (over $100,000), and living in the Midwest.
  • The median one-year ahead expected price change in gas, medical care, a college education, and rent all fell in August. Notably, the measures for price change in medical care and rent both reached new series’ lows.

Labor Market

  • Median one-year ahead expected earnings growth fell 0.1 percentage points to 2.3% in August, below the 12-month trailing average of 2.5%.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—increased by 2.2 percentage points to 38.3%, exceeding its 12-month trailing average of 36.6%.
  • The mean perceived probability of losing one’s job in the next 12 months increased for the second consecutive month from 13.8% in July to 14.2% in August. The mean probability of leaving one’s job voluntarily in the next 12 months decreased by 1.5 percentage points to 20.1%—the lowest reading since March 2018.
  • The mean perceived probability of finding a job (if one’s current job was lost) increased slightly from 59.8% in July to 60.0% in August, above the 12-month trailing average of 59.5%.

Household Finance

  • Median expected household income growth declined for the second consecutive month, from 2.9% in July to 2.7% in August. The decline was broad-based across age and income groups but largest for younger respondents (below the age of 40), and respondents with household incomes under $50,000.
  • Median household spending growth expectations declined by 0.1 percentage point to 3.2%, slightly below the 12-month trailing average of 3.3%
  • Credit access perceptions improved in August, with the proportion of respondents reporting harder credit access than 12 months ago declining by 2.0 percentage points to 25.5%. In contrast, credit access expectations deteriorated in August: The proportion of respondents who expect easier credit conditions 12 months from now declined by 0.9 percentage points to 17.9%, while the proportion of respondents who expect harder credit conditions 12 months from now increased by 2.5 percentage points to 33.9%.
  • The average perceived probability of missing a minimum debt payment over the next three months decreased from 11.7% to 11.1% in August, remaining below the 12-month average of 11.9%.
  • The median expectation regarding year-ahead change in taxes (at current income level) decreased for the third consecutive month from 2.7% in July to 2.3% in August.
  • The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now decreased to 26.5% in August, a new series’ low.
  • One-year ahead expectations, as well as perceptions about households’ financial situations, deteriorated in August, with lower shares of respondents expecting to be and reporting to be better off financially.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now decreased to 38.3% from 41.1%, the lowest reading since October 2016.

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 regarding consumers’ outlooks. 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.

Shelley Pitterson
(917) 698-0510
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