September 11, 2023
NEW YORK—The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the August 2023 Survey of Consumer Expectations, which shows that inflation expectations were largely stable, rising slightly at the short- and longer-term horizons, and falling slightly at the medium-term horizon. Income growth perceptions declined in August, and job loss expectations rose sharply to its highest level since April 2021. Perceptions about current credit conditions and expectations about future conditions both deteriorated. Households’ perceptions about their current financial situations and expectations for the future also deteriorated.
The main findings from the August 2023 Survey are:
Inflation
- Median one- and five-year-ahead inflation expectations rose slightly in August, both increasing by 0.1 percentage point to 3.6% and 3.0%, respectively. Conversely, three-year-ahead inflation expectations declined by 0.1 percentage point to 2.8%. The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) increased at the one-year-ahead horizon and decreased at the three- and five-year-ahead horizons.
- Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—was unchanged at the one-year-ahead horizon and decreased at the three- and five-year-ahead horizons.
- Median home price growth expectations increased by 0.3 percentage point to 3.1%, its highest reading since July 2022. The increase was most pronounced for respondents under the age of 60 and those with a high school education or less.
- Year-ahead commodity price expectations rose across the board in August, increasing by 0.4 percentage point for gas (to 4.9%), 0.1 percent point for food (to 5.3%), 0.8 percent point for the cost of medical care (to 9.2%), and 0.2 percentage point for the cost of college education (to 8.2%) and rent (to 9.2%).
Labor Market
- Median one-year-ahead expected earnings growth rose by 0.1 percentage point to 2.9% in August. The series has been moving within a narrow range of 2.8% to 3.0% since September 2021.
- Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—increased by 1.8 percentage points to 38.5%, remaining below its 12-month trailing average of 40.2%.
- The mean perceived probability of losing one’s job in the next 12 months rose by 2.0 percentage points to 13.8%, its highest reading since April 2021. The mean probability of leaving one’s job voluntarily in the next 12 months also increased by 1.9 percentage points to 18.9%. Both increases were most pronounced for respondents with a high school education or less and annual household income below $50k.
- The mean perceived probability of finding a job (if one’s current job was lost) decreased by 0.1 percentage point to 55.7%.
Household Finance
- The median expected growth in household income fell by 0.3 percentage point to 2.9% in August, its lowest reading since July 2021. The decline was largest for respondents with a high-school education or less.
- Median household spending growth expectations fell by 0.1 percentage point to 5.3%.
- Perceptions of credit access compared to a year ago deteriorated in August, with the share of households reporting it is harder to obtain credit than one year ago hitting a new series high. Expectations for future credit availability also deteriorated in August, with the share of respondents expecting it will be harder to obtain credit in the year ahead increasing.
- The average perceived probability of missing a minimum debt payment over the next three months fell by 0.6 percentage point to 11.1%.
- The median expectation regarding a year-ahead change in taxes (at current income level) declined by 0.2 percentage point to 4.1%.
- Median year-ahead expected growth in government debt declined to 8.9%, its lowest reading since February 2020.
- The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months decreased by 0.8 percentage point to 30.1%.
- Perceptions about households’ current financial situations compared to a year ago deteriorated slightly in August, with the share of households reporting a worse situation compared to a year ago rising. Similarly, year-ahead expectations about households’ financial situations deteriorated in August with the share of households expecting a worse financial situation in one year from now rising.
- The mean perceived probability that U.S. stock prices will be higher 12 months from now decreased by 1.9 percentage points to 35.2%.
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.
