MNI 5 THINGS:NY Fed Survey Sees 1yr And 3yr Infl Exp Unchanged

--1-Yr Inflation Expectations Remain At 2.8%; 3-Yr Stays At 2.9%

--Unemployment Rate Expected To Be Higher Year From Now Up To 34.4%

--Earnings And Income Growth Declines

By Holly Stokes and Sara Haire

     WASHINGTON (MNI) - The following are the key points from the March Consumer

Expectations Survey from the New York Fed released Monday: 

--INFLATION UNCHANGED

     Inflation expectations were roughly unchanged, however, the one-year ahead

expectations slipped mildly to 2.75% from 2.83%, while the three-year rose very

slightly to 2.91% from 2.88%. The median one-year ahead expected gas price

change increase to 4.6%, while food price expectations rose to 4.5%. However,

expectations for a change in the cost of college education and medical care

declined for the fourth consecutive month to 5.9% and 8.8%, respectively.

Despite the cost of living rising, the expectation that rent prices will

increase a year from now fell to 5.2% from 5.3%. 

--FULL EMPLOYMENT EXPECTED

     Despite a tight labor market indicating a better market for job-seekers,

consumers seem to acknowledge the labor market getting close to, or already at

full employment. Considering the unemployment rate is teetering at 4.1%, the

mean probability amongst those surveyed that the unemployment rate will be

higher one year from now increased 2.1 percentage points to 34.4% in March.  If

one's current job was lost, the mean perceived probability of finding a job fell

to 57.6% from 59.7%, dropping below the 2017 average of 58.0%. The mean

perceived probability of losing one's job in the next 12 months increased to

13.9% from 12.8% while the mean probability of leaving one's job voluntarily

declined to the lowest level since July 2013 to 19.3% from 21.4%. 

--EARNINGS AND INCOME DOWN

     As confidence in the labor market slipped, so did expectations for earnings

and income growth. The median one-year ahead earnings growth expectations

declined to 2.6% from 2.7%, driven by those with an income below $50,000. The

0.1% decrease of median expected household income growth to 2.9% was largely

driven by those under 40 and making less than $50,000. 

--HOUSEHOLDS BETTER OFF NOW

     Despite earnings and income growth declining, household spending growth,

while relatively unchanged, did increase modestly to 3.08% from 2.95%. This

increase is perhaps reflective of the percentage of households reporting they

are better off than they were one year ago rising to 40.4%. However, the

proportion that expect to be worse off one year from now also rose, by 1.7% to

11.8%

--LOWER CREDIT AVAILABILITY

     Perhaps reflective of two months of soft consumer credit reports, the

survey respondents reported worsening expectations for credit availability. The

proportion that saw credit as easier to get than 12 months ago declined by 3.7%

to 21.7%, as the proportion that expect credit to become more accessible in the

next 12 month declined by 3.3% to 19.4%. However, the perceived probability of

missing a minimum debt payment over the next three months continued its decline

for the sixth month in a row, reaching a new series low of 10.7%.

--MNI Washington Bureau; +1 212-800-8517; email: sara.haire@marketnews.com

[TOPICS: MMUFE$,M$U$$$]