MNI POLICY: NY Fed: Consumer  Spending Seen Fastest Since 2019

U.S. consumers in September predicted the fastest spending growth since May of last year while more people were at risk of missing a bill payment, the New York Federal Reserve's latest consumer survey published on Tuesday showed.

Median household spending growth expectations quickened to 3.4% in September from 3.0% in August, the report showed. The average probability of missing a future minimum debt payment increased 1 percentage point to 10.7% in September, but still remained below its 2019 average of 11.5%.

The report comes with Fed officials urging Congress to provide more fiscal aid to households, saying the economic recovery will be at risk without more cash for laid-off workers and others struggling to pay their bills. Talks between White House officials and Congressional Democrats have made little progress in recent weeks and may be deferred until well after next month's elections.

The mean expectation that the U.S. unemployment rate will be higher in a year dropped to 36.4% in September from 39.1% in August, below its 2019 average of 36.9%. The series high of 50.9% was reached in March.

The mean perceived probability of losing one's job in the next 12 months fell to 16.6% in September from 18.0% in August, but remained well above its pre-Covid-19 reading of 13.8% in February.

Median one-year ahead expected earnings growth remained flat at 2.0% in September, for the second consecutive month, below its 2019 average level of 2.4%.

One-year ahead expectations about households' financial situations also improved with more respondents expecting their financial situation to improve and fewer respondents expecting their financial situation to worsen.

The survey of consumer expectations, one of the Fed's price gauges as it weighs interest rates policy, showed median inflation expectations at the one-year horizon remained unchanged from August to September at 3.0%, but above the September 2019 reading of 2.5%.

Median home price change expectations continued its upward trend after reaching a series low of 0% in April, and increasing from 2.8% in August to 3.1% in September, just above its 2019 average of 3.0%. The Fed's report said home price expectations had returned to pre-Covid levels. The results are drawn from an internet-based survey with a rotating panel of 1,300 households.