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U.S. consumers dialed back their inflation expectations at the short- and longer-term horizons, though their medium-term expectations rose slightly, the Federal Reserve Bank of New York said Monday in its March Survey of Consumer Expectations.
At the one- and five-year-ahead horizons, median implied inflation fell by 0.2 percentage point in June to 3.0% and 2.8%, respectively. On the other hand, the median three-year ahead inflation expectations edged up to 2.9% from 2.8%.
Consumers also tamed their outlooks for home price growth. Median home price growth expectations decreased to 3.0% from 3.3%, back to the series 12-month trailing average.
On the labor market, mean unemployment expectations—or the mean probability that the U.S. jobless rate will be higher one year from now—declined by 1.0 percentage point to 37.6% in June. That’s a hair below the series 12-month trailing average of 37.7%.
Still, the mean perceived probability of losing one’s job in the next 12 months advanced by 2.4 percentage points to 14.8%. The mean probability of leaving one’s job voluntarily in the next 12 months also increased (by 0.9 percentage point) to 20.5%, above the series 12-month trailing average of 19.0%.
Meantime, households expect to earn less and spend more, the survey showed, with median expected growth in income declining 0.1 percentage point to 3.0% in June and median spending growth expectations rising by 0.1 percentage point to 5.1%.
The average perceived probability of missing a minimum debt payment over the next three months rose by 0.3 percentage point to 12.3%, exceeding the series 12-month trailing average of 12.1%.