Orbazon
U.S. consumers significantly lowered their medium-term inflation expectations, while their short- and long-term expectations remained stable, the New York Federal Reserve said Monday in its July survey of consumer expectations.
Over the three-year horizon, average implied inflation The UK inflation rate fell sharply to 2.3% from 2.9% the previous month, its lowest level since the survey began in June 2013. Median one-year and five-year inflation expectations remained unchanged at 3.0% and 2.8% respectively.
Economists, including those at the Federal Reserve, see inflation expectations as a key component of assessing underlying inflation because consumers and businesses will adjust their behavior if they expect prices and labor costs to continue to rise. The Labor Department is scheduled to release an update on its closely watched consumer price index on Wednesday.
In the labor market, the median unemployment expectation — or the average probability that the U.S. unemployment rate will rise a year from now — fell about 1 percentage point to 36.6%, still below its 12-month average of 37.7%.
Consumers were more confident they would not lose their jobs, with the average probability of losing a job in the next 12 months falling 0.5 percentage points to 14.3%. The average probability of voluntarily leaving a job in the next 12 months rose to 20.7% — the highest reading since February 2023 — from 20.5%.
Households continue to expect their spending to exceed their income. The median household income growth forecast remained unchanged at 3.0% in July, while the median household spending growth forecast fell 0.2 percentage points to 4.9%, the lowest since April 2021.
The average perceived probability of defaulting on a minimum debt payment in the next three months rose 1.0 percentage points to 13.3%, the highest reading for the gauge since April 2020, according to reconnaissance.
