New survey data from the Federal Reserve Bank of New York reveals that US consumers are optimistic about the economic outlook, anticipating easing inflation, a strong labor market, and increased spending in the coming year. The October Survey of Consumer Expectations showed improved sentiment compared to the previous month, with consumers’ perceived probability of missing a minimum debt payment dropping to 11.99%, matching levels seen in June and aligning with pre-pandemic ranges.
Expectations for inflation in the next one and five years decreased by 0.1 percentage points, reaching 3.6% and 2.7%, respectively. However, median inflation expectations at the three-year horizon remained stable at 3%, a yearly high. The Federal Reserve monitors consumer inflation expectations closely, recognizing their potential to influence economic behavior.
While consumers’ expectations for wage growth dipped slightly to 2.83%, other indicators, such as anticipated unemployment rates and job-finding prospects, showed improvement. The median expected growth in household income increased to 3.1%, reflecting growing confidence compared to February 2020 levels.
Spending expectations, though slightly lower than the peak in May 2022, remained elevated at 5.25%, well above pre-pandemic levels of 3.1%. The positive consumer outlook aligns with the Federal Reserve’s interest in maintaining economic stability amid concerns about inflation expectations.
[Note: This summary is based on the information provided in the article and does not necessarily reflect the full scope of the survey results.]