Consumers Anticipate Lower Inflation and Slower Home Price Growth in the Coming Year

The Federal Reserve Bank of New York’s Center for Microeconomic Data released its June 2024 Survey of Consumer Expectations, revealing a decline in inflation expectations for both short-term and long-term horizons, though a slight increase for the medium-term. Additionally, expectations for home prices and prices of specific goods one year from now have dropped.

Key Findings from the June 2024 Survey:

Inflation:

• The median one-year and five-year inflation expectations both fell by 0.2 percentage points, landing at 3.0% and 2.8%, respectively. Conversely, the median three-year inflation expectation edged up by 0.1 percentage point to 2.9%.
• Disagreement among respondents about inflation remained stable for the one-year horizon, decreased for the three-year horizon, and increased for the five-year horizon.
• Uncertainty about future inflation decreased for one-year and three-year horizons but rose for the five-year horizon.
• Expectations for home price growth decreased to 3.0% from 3.3%, aligning with the 12-month trailing average.
• Expected price changes for the year ahead fell for all surveyed goods: gas by 0.5 percentage points to 4.3%, food by 0.5 percentage points to 4.8%, medical care by 1.7 percentage points to 7.4%, rent by 2.6 percentage points to 6.5%, and college education by 3.1 percentage points to 5.3%—the lowest since December 2020.

Labor Market:

• Expected earnings growth for the next year increased by 0.3 percentage points to 3.0%, the highest since September 2023.
• The probability of job loss in the next 12 months rose by 2.4 percentage points to 14.8%, while the likelihood of voluntarily leaving a job increased by 0.9 percentage points to 20.5%.
• The probability of finding a new job if current employment is lost increased to 53.4% from 52.2%, the highest since January 2024 but below pre-pandemic levels.

Household Finance:

• Expected household income growth for the next year slightly decreased by 0.1 percentage points to 3.0%, within the narrow range seen since January 2023.
• Household spending growth expectations increased by 0.1 percentage points to 5.1%, remaining stable since August 2023 and above pre-pandemic levels.
• Credit access perceptions worsened slightly, with more respondents finding it harder to obtain credit than a year ago. Expectations for future credit conditions became more polarized.
• The probability of missing a minimum debt payment in the next three months rose by 0.3 percentage points to 12.3%.
• Expected tax changes for the next year increased by 0.4 percentage points to 4.3%.
• Expected growth in government debt remained unchanged at 9.3%.
• The probability of higher savings account interest rates in 12 months decreased by 1.7 percentage points to 25.3%.
• Financial situation perceptions slightly worsened, with more respondents feeling worse off than a year ago and fewer feeling better off. Future financial situation expectations were less varied, with fewer expecting improvements or declines.
• The probability of higher U.S. stock prices in 12 months fell by 1.3 percentage points to 39.2%.

About the Survey of Consumer Expectations (SCE)

The SCE provides insights into consumer expectations for inflation, prices of essential goods, job prospects, earnings growth, spending, and credit access. It also measures uncertainty regarding these outlooks. Data is available by demographics such as age, geography, income, education, and numeracy.

Conducted online, the SCE surveys a nationally representative panel of approximately 1,300 household heads, rotating members monthly to track changes over time. This method allows for observing shifts in individual expectations and behaviors.

For further details on the SCE, including methodology, interactive charts, and the survey questionnaire, please refer to the Federal Reserve Bank of New York’s resources.

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