NEW YORK (MaceNews) – US consumer inflation expectations were mixed in December with short-term expectations down while medium term expectations were flat, and long-term expectations rose, according to a survey from the Federal Reserve Bank of New York.
Expectations for household income rose but spending growth plans dropped, and concern about possible job losses increased in December, according to the New York Fed’s nationwide survey of roughly 1,300 consumers.
The median expectation for inflation one year ahead among survey respondents declined again to 5.0% in December from 5.2% in November and 5.9% in October. The December level was the lowest since July 2021. The median one-year inflation expectation is down from its recent peak of 6.8% in June.
The median three-year inflation expectation was unchanged at 3.0% in December from 3.0% in November and down from 3.1% in October. The median five-year inflation expectation edged up to 2.4% from 2.3% in November and 2.4% in October.
The lower one-year inflation expectations in part reflected softer expectations for gas prices, with the median expected increase in gas prices down 0.7 percentage point to 4.1% in December. Expectations for food price increases in the year ahead fell by 0.7 percentage point to 7.6% and declined 0.2 percentage point to 9.6% for rent.
The median expected change in the cost of medical care rose 0.1 to 9.7%, while the median expected change in the cost of college education dipped by 0.2 percentage point to 9.2%.
Median one-year-ahead expected earnings growth increased by 0.2 percentage point to 3.0% in December. The rise was driven by respondents without a college degree and ages 60 and over. The series has ranged between 2.8% and 3.0% since September 2021.
The mean perceived probability of losing one’s job in the next 12 months rose by 0.9 percentage point to 12.6%, its highest since November 2021. Similarly, the mean probability of leaving one’s job voluntarily in the next 12 months increased by 0.7 percentage point to 19.3%. The mean perceived probability of finding a job (if one’s current job was lost) decreased to 57.5% from 58.2% in November.
The median expected growth in household income dropped sharply to 5.9% from 6.9% in November. Perceptions of credit access compared to a year ago improved slightly in December, but the share of households reporting it is harder to obtain credit than one year ago remains near its series high. Expectations for future credit availability improved in December, with the share of respondents expecting it will be harder to obtain credit in the year ahead falling.
Median home price growth expectations increased by 0.3 percentage point to 1.3%. The increase was driven by those in the South census region. Despite this increase, home price growth expectations remain subdued relative to their pre-pandemic levels.
Median uncertainty regarding future inflation was unchanged at the short-term horizon and decreased at the medium-term horizon.