MNI POLICY: NY Fed Survey: Sharp Deterioration In Expectations

By Evan Ryser

     WASHINGTON (MNI) - U.S. consumer views of job security, earnings, income,

and spending growth were the worst on record in the New York Federal Reserve's

April consumer survey.

     The 20.9%, up from 18.5%, of respondents who said their job is at risk was

a new record in survey data back to 2013, according to the report Monday.

     Respondents who said they would find a job in the next three months, if a

current job was lost, plunged 6.1 percentage points to 40.7%, the largest

month-to-month decline recorded since 2013. 

     Median expectations for earnings growth, and income growth also showed

declines. Unemployment expectations retreated slightly from last month's series

high of 50.9% to 47.6%. 

     The survey recorded a substantial deterioration in financial and economic

expectations, including sharp declines in household income and spending growth

expectations.

     -- MISSING DEBT PAYMENTS

     The Internet-based survey with a rotating panel of 1,300 households showed

perceived and expected availability of credit worsened. 

     For the first time since the inception of the survey in 2013, the median

respondent expects no increase in home prices over the next 12 months. 

     Median household spending growth expectations declined 0.1pp to 2.2% in

April, a new record low. "This decrease was driven mostly by respondents between

the age of 40 and 60, similar to the decline in median household income growth

expectations," the report said.

     And average perceived probability of missing a minimum debt payment over

next three months increased for the second consecutive month to 16.2% in April,

well above the 12-month trailing average of 11.9%.  

     --EARNINGS, INFLATION

     Median earnings growth expectations for the next twelve months fell to 1.8%

in April from 2.0% in March, matching series' record lows. "The drop was

broad-based across all age and income groups." 

     The survey of consumer expectations, one of the Fed's price gauges as it

weighs interest rates policy, showed increased consumer disagreement about the

future path of inflation, as median inflation expectations at the one-year

horizon ticked up slightly by 0.1% to 2.6%. 

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

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