Consumer inflation expectations have fallen for the third consecutive month, according to the latest Survey of Consumer Expectations from the New York Federal Reserve.
One-Year: The median one-year-ahead inflation expectation declined to 3.0% in June, down 0.2 percentage points from the previous month and marking the lowest level since March. This consistent decline indicates a growing sense of stability among consumers regarding near-term inflation.
- The survey also reported a drop in the three-year inflation expectation, which fell 0.2 percentage points to 2.8%.
- The median five-year-ahead inflation expectation rose slightly by 0.1 percentage point to 2.9% in June, suggesting that consumers anticipate a modest uptick in inflation over a longer horizon.
Income: Despite concerns about inflation, the median one-year-ahead expected earnings growth showed a positive trend, increasing by 0.3 percentage points to 3.0%. This figure is above the 12-month trailing average of 2.8% and represents the highest reading since September 2023, reflecting consumer optimism about wage growth.
- Median household spending growth expectations rose marginally by 0.1 percentage point to 5.1%. This series has been stable, ranging between 5.0% and 5.3% since August 2023, indicating steady consumer spending projections.
Housing: In the housing market, median home price growth expectations decreased to 3.0% from 3.3%, aligning with the 12-month trailing average. This dip suggests a tempering of home price growth expectations among consumers, possibly influenced by current market conditions and interest rate trends
Overall, the survey results paint a nuanced picture of consumer sentiment. While inflation expectations continue to decline, indicating increased confidence in price stability, the mixed signals regarding income and spending growth reflect ongoing uncertainties in the economic landscape.
