MNI POLICY: US Spending Expectations Highest In 6 Yrs- NY Fed

U.S. consumer views of future spending reached six-year highs in December, the New York Fed's survey of households Monday showed.

Median expected growth in household spending over the next year increased to 3% in December 2020 from 2.2% in August 2020 and 2.4% in December 2019. The increase was broad-based across education and income groups, the survey showed.

Median expected changes in spending on non-essential items and essential items both reached highs going back to December 2014.

Spending on non-essential items such as hobbies, leisure, or vacation, over the next year increased to 1.6%, from 1.0% in August and 1.4% in December 2019, both series highs since December 2014. Median year-ahead expected change in household spending on essential items, such as daily living expenses, over the next year increased to 4.1% in December 2020 from 3.5% in August and 3% in December 2019.

When asked what consumers would do with an unexpected 10% in income, 36.3% of respondents would pay down debt, 44.5% said they save or invest, and 19.3% said they would donate or spend the cash.