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Free AccessAmerican households' income growth expectations dropped substantially in January, according to a New York Federal Reserve survey released Monday.
After increasing each month since September of last year, the median expected growth in household income dropped by 1.3 percentage point to 3.3%, the largest one-month drop in the nearly ten-year history of the series. Still, the January reading is only slightly below its 12-month trailing average of 3.5%, and the series remains well above pre-pandemic levels. January’s decrease was more pronounced among respondents with no more than a high school education, respondents older than 60, and those with annual household incomes below USD50, 000.
The survey showed little change in inflation expectations at the short-, medium-, and long-term horizons. Median inflation expectations remained unchanged at the one-year-ahead horizon at 5.0%, decreased by 0.3 percentage point at the three-year-ahead horizon to 2.7%, and increased by 0.1percentage point at the five-year-ahead horizon to 2.5%.
Source: New York Fed
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