January 2019 Consumer Expectations: Consumer Optimism Ebbs Although Inflation Expectations Hold Steady

from the New York Fed

The January 2019 Survey of Consumer Expectations, which shows that while short- and medium-term inflation expectations were unchanged, households were generally less optimistic about the economy and about future changes in their financial situation. Expectations that the unemployment rate will be higher a year from now increased for the fourth consecutive month and expectations about government debt growth increased sharply.

Regarding their own financial situation, respondents were less optimistic about future credit availability, and fewer expect to be financially better off a year from now.


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The main findings from the January 2019 Survey are:


  • Median inflation expectations at both the one-year and three-year horizons were unchanged at 3.0% in January. Inflation expectations at both horizons have been very stable over the past nine months.
  • Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—also was unchanged at the one-year and three-year horizons.
  • Median home price change expectations were stable at 3.0% in January, after six consecutive months of decline from a recent high of 3.9% in June.
  • Expectations for changes in the cost of medical care decreased to 8.3% in January, from 9.0% in December. The median one-year ahead expected a change in gasoline and food prices increased to 4.5% and 4.2% in January, respectively, from 4.2% and 3.7% in December.

Labor Market

  • Median one-year-ahead earnings growth expectations declined to 2.4% in January, from 2.5% in December, and remain below the 2018 average of 2.6.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—increased 1.8 percentage points in January, to 40.6%, marking the fourth consecutive increase and the highest level since March 2014. The increase was broad-based across age, education and income groups.
  • The mean perceived probability of losing one's job in the next 12 months increased to 14.5%, from 13.8% in December, moving above the trailing 12-month average of 14.2%. The mean probability of leaving one's job voluntarily in the next 12 months increased to 21.4% from 21.1%, remaining just below the trailing 12-month average of 21.5%.
  • The mean perceived probability of finding a job (if one's current job was lost) increased slightly to 59.2%, from 58.8% in December, and is now 0.4 percentage points above the 2018 average. The series has been stable since June 2017, remaining within a narrow range of 57.1 to 60.1%.
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