NY Fed:Inflation Expectations Unch For 1-Yr and 3-Yr Ahead

--Expected Household Spending, Income, and Earnings Growth Rises

--One-Year and Three-Year Infl Expectations Ahead Unch at 2.6% and 2.8%

--Expected Household Income Growth Hit a Series' High With 3.0%

By Sara Haire

     WASHINGTON (MNI) - Consumers are expecting the labor market and household

finance to strengthen and grow, while the one-year and three-year ahead

inflation expectations are unchanged at 2.6% and 2.8%, respectively, the New

York Federal Reserve Bank reported Monday.

     The survey reported that the median of respondents expressing uncertainty

regarding future inflation outcomes declined to series' lows at 2.21% for the

one-year ahead and 2.24% for the three-year ahead.

     The median home price change expectation saw an increase to 3.3% from 3.0%

in November, still above the trailing 12-month average of 3.2%, while home price

change uncertainty remained flat.

     The expectations for a change in the cost of college education saw a jump

to 8.0% from 6.6%, supported by the College Board's annual report indicating

average increases in tuition and fees from 2.9% to 3.6% this year, and are

continuing to rise.

     The year-ahead expected gas price change increased to 4.3% from 3.8% in

October.

     --FIRMING LABOR MARKET

     As the FOMC deliberates the path of future interest rates, survey-based

measures indicating changes in the economy, specifically in the labor market

holds immense value. The New York Fed indicates that the median expectations for

one-year ahead earnings growth saw a rebound to 2.6% from 2.1% in October, a

level not seen since July of this year. The increase was driven by those with

less than a college education.

     Both the perceived probability of losing one's job and leaving one's job

voluntarily in the next year saw declines to 13.5% and 21.5%, respectively. In

addition, the mean perceived probability of finding a job increased to 60.1%

from 57.7%, well above the trailing 12-month average of 57.1%.

     The expectation that the unemployment rate will be higher one year from now

fell to 33.7% from 36.0%, not surprising considering fewer people are looking to

leave their jobs, but if they did, they expect they would be able to find a job.

However, the unemployment rate has been sitting at a 17-year low, possibly

growing closer to full employment.

     --HOUSEHOLD FINANCE RISING

     Household spending growth expectations saw an increase to 3.6% in November,

up from 2.8% in October. Despite the increase, this level reaching above the

12-month average of 3.1%. "The increase was broad-based across education and

income groups," the survey stated.

     Falling in line with the increase in household spending growth

expectations, the median expected household income growth jumped to 3.0% in

November, up from 2.6%, reaching a new series' high.

     In addition to the decrease in expected growth for household income, the

median expected growth in earnings for the year ahead saw a small decrease to

2.5%, down from 2.6%. This continues to be above the 12-month average of 2.3%.

     The median expectation, however, regarding year-ahead change in taxes

remained flat at 2.3%, while 42.2% of respondents expect to be better off

financially, this is up from the 30.9% in October and 37.7% seen in November

2016.

     Despite the median expectation of a change in taxes in the year ahead

remaining at 2.3%, the expectation of growth in the year ahead for government

debt saw a sharp rise to 7.8% from 5.9%, "a level not seen since November 2015,"

the survey reported.

--MNI Washington Bureau; +1 212-800-8517; email: sara.haire@marketnews.com

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