U.S. consumers’ expectations were roughly stable in October, the Federal Reserve Bank of New York’s Center for Microeconomic Data said Monday.
Specifically, expectations for inflation remained relatively steady, which is good news for the Federal Reserve’s policymakers, who closely monitor inflation expectations for signs of imminent inflation resurgence. As a result, the Federal Open Market Committee may see less need to raise interest rates further. But last week, Fed Chair Jerome Powell reminded markets that the central bank won’t hesitate to raise rates again if needed.
The median inflation expectation for one-year ahead inflation ticked down to 3.6% in October from 3.7% in September. The median three-year ahead inflation expectation was unchanged at 3.0%, and the five-year head inflation expectation slipped to 2.7% from 2.8%.
Consumers appear slightly more uncertain about their current job security. The mean perceived probability of losing one’s job in the next 12 months rose by 0.3 percentage point to 12.7%. At the same time, the mean perceived probability of finding a job rose marginally to 56.6% from 56.5%.
At the household level, consumers’ expectations for income edged up 0.1 pp to 3.1%, remaining above the series’ February 2020 prepandemic level of 2.7%. Meanwhile, median household spending growth expectations remain unchanged at 5.3%.
Credit conditions appeared to ease slightly. Perceptions of credit access compared to a year ago improved slightly with a decreased share of respondents reporting that it is more difficult to obtain credit now than a year ago.
The average perceived probability of missing a minimum debt payment over the next three months fell by 0.5 pp to 12.0%, a level comparable to those just before the pandemic.
On Friday, the University of Michigan Consumer Sentiment Index worsened, largely on expectations that inflation increase.