The latest monthly survey of consumers conducted by the Federal Reserve Bank of New York reveals a slightly improved outlook on inflation for Americans. However, job security remains a concern for many.
Inflation Expectations
In November, consumers predicted a 3.4% inflation rate for the upcoming year, showing a decrease of 0.2 percentage points from their expectations in October. This is the lowest level of short-term inflation expectations since April 2021, according to the New York Fed’s Survey of Consumer Expectations.
In contrast, inflation expectations for three and five years from now remained unchanged.
Mixed Feelings About the Labor Market
Despite growing optimism regarding price increases, the survey highlighted mixed sentiments about the labor market among Americans.
While consumers were less pessimistic about the unemployment rate in the year ahead, they expressed increased concern about the possibility of losing their jobs. The mean perceived probability of job loss rose by 0.9 percentage points to 13.6%.
Furthermore, respondents displayed limited expectations for wage growth. The median expected earnings growth for the next year declined by 0.1 percentage point to 2.7%.
Spending and Household Finances
In November, perceptions and expectations regarding household finances remained mostly unchanged.
The median expected growth in household income was consistent with the previous month’s figures.
On a positive note, consumers demonstrated increased optimism about their access to credit, stating that it is easier to obtain credit now compared to a year ago.
Additionally, Americans expressed improved confidence in their ability to repay debts. The average perceived probability of missing a minimum payment over the next three months decreased by 0.2 percentage points to 11.8%, aligning with pre-pandemic levels.
Overall, while Americans are becoming more optimistic about inflation, concerns about job security persist. However, their outlook on household finances remains relatively stable.
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