The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the July 2023 Survey of Consumer Expectations, which shows that inflation expectations declined at the short-, medium-, and longer-term horizons. Year-ahead price growth expectations for food, medical care, and rent declined to their lowest levels since at least early 2021. Labor market expectations strengthened, while households’ perceptions about their current financial situations and expectations for the future improved.
- Survey of consumers in July puts one-year ahead expected inflation at 3.5%, lowest since April 2021, vs. June's 3.8%.
- July three-year ahead expected inflation at 2.9% vs. June’s 3.0%.
- July five-year ahead expected inflation at 2.9%% vs. June's 3.0%.
- July survey finds retreating inflation expectations across a number of categories.
- July expected home price rise moves to 2.8% from June’s 2.9%.
- July expected rent price increase lowest since January 2021.
- Survey respondents report better personal financial situations in July.
Median year-ahead expected price changes declined for all commodities: by 0.2 percentage point for gas (to 4.5%), 0.1 percentage point for food (to 5.2%), 0.9 percentage point for medical care (to 8.4%), 0.3 percentage point for the cost of a college education (to 8.0%), and 0.4 percentage point for rent (to 9.0%). The current readings for food, medical care, and rent are the lowest since September 2020, November 2020, and January 2021, respectively.
Labor market:
- Median one-year-ahead expected earnings growth dropped by 0.2 percentage point to 2.8%, fluctuating between 2.8% and 3.0% since September 2021.
- Mean unemployment expectations for the next year decreased by 1.0 percentage point to 36.7%, the lowest since April 2022.
- The average perceived chance of job loss in the upcoming year decreased by 1.1 percentage points to 11.8%.
- The mean probability of voluntarily leaving a job in the next year dropped by 1.9 percentage points to 17.0%, the lowest since March 2021.
- The decrease in the average quit probability was consistent across demographic groups.
- The perceived likelihood of finding a new job (if the current one was lost) rose from 55.3% in June to 55.8% in July.
Household finance:
- Median expected household income growth remained at 3.2% in July, below the 12-month average of 3.6%.
- Median household spending growth expectations rose from 5.2% in June to 5.4% in July, still below the 12-month average of 6.1%.
- Perceptions of current and future credit access were mostly stable, with a minor decline in current perceptions and a slight rise in future expectations.
- The perceived likelihood of missing a minimum debt payment in the next three months dropped by 0.3 percentage point to 11.7% in July.
- Median year-ahead tax change expectations (at current income) remained at 4.3%.
- Median expected growth in government debt for the next year decreased from 10.0% in June to 9.7% in July.
- The average perceived chance of a higher interest rate on saving accounts in 12 months rose by 1.1 percentage points to 30.9%.
- Positive perceptions about current household financial situations increased in July, with more feeling better off than last year and fewer feeling worse off. Optimism for the next year also increased, reaching its highest since September 2021.
- The perceived probability of U.S. stock prices being higher in 12 months increased by 1.8 percentage points to 37.1%.
