MNI: 5 Things We Learned From NY Consumer Expectations Survey

By Sara Haire and Holly Stokes

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

Consumer Expectations Survey from the New York Fed released Monday: 

     - Median inflation expectations for the one-year and three-year horizon

both slipped 0.1%, to 2.7% and 2.8% respectively. These declines were driven by

respondents with incomes below $50,000. Consumers also expressed less

uncertainty regarding future inflation. The expectation that medical care costs

will change in the year ahead decreased to 9.2%, lowest since April of 2017,

following the thwarted attempt at repealing the ACA. 

     - Consumers appear optimistic in regards to their year-ahead financial

situations, credit availability, and earnings growth - with all showing

continued improvements. In particular, expectations of being better off

financially one-year from now increased from 43.7% to 45.7%, reaching a new

series high. This follows an increase from 30.7% to 38.7% of consumers believing

that they are currently better off-financially than they were a year-ago, again

reaching a new series high.

     - The expectation that unemployment will be higher a year from now

decreased slightly to a new series' low of 32.4% from 33.5% in December. This

suggests that people expect the labor market to continue tighten, however, the

mean perceived probability of losing one's job has increased to 14.9% from

13.8%. In addition, the mean perceived probability of finding a job if the

current job was lost saw a slight decline to 59.7%. This could signal a latent

acknowledgement that the labor market is close to reaching full employment since

the unemployment rate has now fallen to a 17-year low.  

     - In January, expectations for growth in government debt one year from now

continued to decline, falling from 7.2% to 5.9%. This shows a rising confidence

in politicians' commitment to fiscal austerity. However, after the passage of

the two-year budget deal in February, which allows lawmakers to spend around

$300 billion more, these expectations may be quickly changing. 

     - The median home price change expectation of consumers increased to 3.5%,

its highest reading since May 2017. Consumers may be considering the idea that

prices could see a decline considering the median sales price of a new home has

reached a series high of $335,400, and an increase in the months' supply of new

homes could push that price back down. However, the mean probability of changing

residence over the next 12 months, which has continued to fall since November

2013, reached a new series low of 15.9% in January. This, coupled with the

already limited supply of existing home for sale could push prices up as the

supply continues to tighten. 

--MNI Washington Bureau; +1 202-371-2121; email: holly.stokes@marketnews.com

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

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