MNI POLICY: US Spending Seen Fastest Since 2016 in NY Fed Poll

U.S. consumer views of spending growth over the next year are the highest since 2016, the New York Federal Reserve's consumer survey showed on Monday.

Year-ahead median household spending growth in November increased 0.6 percentage points to 3.7%, driven by households with incomes less than USD50,000. The share of people who thought they could lose their job in the next year fell for a third straight month to 14.6%, approaching last year's average of 14.3%.

The median expected household income growth rate was unchanged at 2.1%, well below the 2019 average of 2.8%. Earnings growth remained for the fifth straight month at 2.0%, below its 2019 average level of 2.3%.

Further spending optimism could come this month with the beginning of the American mass vaccination campaign on Monday morning, while Congress continues to debate a second major relief package.

The NY Fed survey showed mean unemployment expectations for the year ahead increased for the first time since July, to 40.1% from 35.4% in October. The average perceived probability of missing a minimum debt payment over the next three months increased by 1.6 percentage points to 10.9% in November, but it was still below its 2019 average of 11.5%.

INFLATION EXPECTATIONS UP

The survey of consumer expectations, one of the Fed's price gauges as it weighs interest rates policy, showed November median inflation expectations increased 0.2 percentage point to 3.0% at the one-year horizon. Measures of disagreement over inflation expectations across respondents remain substantially above their pre-Covid level.

Median year-ahead home price change expectations decreased 0.1 percentage point to 3.0% in November, the first monthly decline in the series since April when it reached its lowest level of 0%. The decline was recorded in all Census regions except the Northeast.

The survey results are drawn from an internet-based survey with a rotating panel of 1,300 households.