The latest survey from the Federal Reserve Bank of New York shows consumer expectations for US inflation falling sharply in the coming years, providing good news for policymakers as they struggle to ease price pressure.
hopes for US inflation Three years ahead fell to 2.8% in August, from 3.2% the previous month and 3.6% in June, according to the New York Fed’s monthly Survey of Consumer Expectations. The outlook for inflation a year ahead declined to 5.7 per cent from 6.2% in July. Over a five-year horizon, consumers now expect 2% inflation, up from 2.3%.
It was the fourth straight monthly drop in inflation expectations three years ahead, which has fallen from a peak of 4.2% in September and October 2021. This coincides with the Fed’s pivot to remove pandemic policy support, signaling that it will soon start scaling back. Monthly property purchase. The taper process ended in March, at which point the Fed raised rates from near zero.
US central bankers aiming for 2% inflation growing interest Faster rates to curb the highest inflation in nearly 40 years. When they meet next week, they are expected to increase by 75 basis points for the third time in a row.
U.S. inflation expectations for gas price hikes are also waning, with a New York Fed poll showing households expect them to remain unchanged nearly a year from now. Year-over-year price change expectations fell 0.8 percentage points to 5.8% for food and 0.3 percentage points to 9.6% for fare.
Expectations for the housing market, which was experiencing sharp price increases but has cooled in recent months, have also eased.
According to the report, “Average home price expectations have declined sharply by 1.4 percentage points to 2.1%, the lowest reading since July 2020.” Nearly two-thirds of the reading of 6% since April 2022.”
The decline in housing prices and rents is in line with survey data released by Fannie Mae last week.
Consumers were more optimistic about their future household income and financial conditions, but these gains were still less than inflation.
While inflation expectations declined, the average one-year forward expected earnings growth in August remained unchanged at 3%. Respondents also expect that growth in household spending will outpace income. Spending expectations during the next year rose 1 percentage point to 7.8% in August.
Consumers expressed optimism in the survey, despite the high interest rates. Fewer households are expected to be worse a year from now and US stock prices have an average probability of rising 2.1 percentage points from now to 36.4%.
Still, the survey shows that the economy is mixed. The reported probability of missing a minimum loan payment in the next three months rose 1.4 percentage points to 12.2%, its highest reading since May 2020.
The Fed’s national online survey is based on a rotating sample of nearly 1,300 households.
This story has been published without modification in text from a wire agency feed.
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