NEW YORK—The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the September 2022 Survey of Consumer Expectations, which shows that inflation expectations continued to decline in the short term, but increased slightly in the medium and longer terms. Household spending expectations fell sharply, posting their largest one month decline since the series’ inception in June 2013. Home price growth expectations continued to decline in September and are now at their lowest levels since June 2020. Households’ expectations about future credit access one year from now improved somewhat.
The main findings from the September 2022 Survey are:
Inflation
- Median one-year-ahead inflation expectations continued to decline in September, falling by 0.3 percentage point to 5.4%, its lowest reading since September 2021. In contrast, three-year-ahead inflation expectations rose slightly to 2.9% from 2.8% in August. The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) was unchanged at the one-year horizon and decreased at the three-year horizon.
- Median five-year-ahead inflation expectations, which have been elicited in the monthly SCE core survey on an ad-hoc basis since the beginning of this year and were first published in July 2022, increased by 0.2 percentage point to 2.2%. Disagreement across respondents in their five-year-ahead inflation expectations declined in September.
- Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—decreased at the short-term horizon and was unchanged at the medium-term horizon.
- Median home price growth expectations declined by 0.1 percentage point to 2.0, its lowest reading since June 2020. The decline was most pronounced among respondents with a college education and annual household income over $100k, but was broad based across geographic regions. Home price growth expectations remain subdued relative to their pre-pandemic levels.
- Expectations about year-ahead price changes rose by 0.4 percentage points for gas (to 0.5%), 1.0 percentage point for food (to 6.9%), 0.6 percentage point for college education (to 9.0%) and 0.1 percentage point for rent (to 9.7%). The median expected change in the cost of medical care, on the other hand, fell by 0.1 percentage point (to 9.2%).*
Labor Market
- Median one-year-ahead expected earnings growth fell by 0.1 percentage point to 2.9% in September. The decline was most pronounced for respondents over the age of 60 and those with a high-school education or less.
- Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—decreased by 0.9 percentage point to 39.1%.
- The mean perceived probability of losing one’s job in the next 12 months increased by 0.5 percentage point to 11.6%. Similarly, the mean probability of leaving one's job voluntarily in the next 12 months increased by 0.9 percentage point to 19.4%. Both increases were most pronounced for those over the age of 60.
- The mean perceived probability of finding a job (if one’s current job was lost) increased by 0.1 percentage point to 57.3%.
Household Finance
- The median expected growth in household income was unchanged in September at its series high of 3.5%.
- Median household spending growth expectations fell sharply to 6.0% from 7.8% in August, its steepest one month decline since the series’ inception in June 2013, and its lowest reading since January of this year. The decline was broad based across demographic groups.
- Perceptions of credit access compared to a year ago were roughly unchanged, but the share of households reporting it is harder to obtain credit than one year ago remains at a series high. In contrast, expectations for future credit availability improved, with the share of respondents expecting it will be harder to obtain credit in the year ahead falling sharply.
- The average perceived probability of missing a minimum debt payment over the next three months was unchanged at 12.2%.
- The median expectation regarding a year-ahead change in taxes (at current income level) was also unchanged at 4.5%.
- Median year-ahead expected growth in government debt decreased by 0.1 percentage point to 10.3%, its lowest reading since March 2020.
- The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months increased by 0.6 percentage point to 34.7%. The increase was most pronounced for those with annual household income over $100k.
- Perceptions about households’ current financial situations compared to a year ago were roughly unchanged, but the share of households reporting a worse situation compared to a year ago remains close to its series high. Year-ahead expectations about households’ financial situations were also roughly unchanged in September.
- The mean perceived probability that U.S. stock prices will be higher 12 months from now decreased by 1.1 percentage points to 35.3%.
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, this panel allows us to observe the changes in expectations and behavior of the same individuals over time. For further information on the SCE, please refer to an overview of the survey methodology here, the interactive chart guide, and the survey questionnaire.
* Due to a data recording error in the “one-year ahead commodity price change expectations” series, the data for this series has been revised going back to October 2020.
