Americans Expect Lower Near-Term Inflation, NY Fed’s Latest Survey Shows

• Inflation expectations at the three- and five-year-ahead horizons held steady at 3%.
• The U.S. consumers’ expectations for future credit availability deteriorated.
• As per the survey, consumers saw a lower likelihood of a job loss, and higher likelihood of finding a job in the event of a job loss.

U.S. citizens expect lower inflation in the near-term, according to a report from the Federal Reserve Bank of New York that was released on Monday. 

As part of its latest Survey of Consumer Expectations (SCE), the apex bank said that inflation expectations one year from now stood at 3.1% in January compared with 3.4% in December, while at the three- and five-year-ahead horizons, expectations held steady at 3%.

The report comes weeks after the U.S. Federal Reserve in its latest FOMC meeting statement had said that inflation was somewhat elevated, which prompted them to keep the benchmark interest rates steady. 

The SCE gives information about how consumers expect overall inflation and prices for food, gas, housing, and education to behave. It also provides insight into Americans’ views about job prospects and earnings growth, and their expectations about future spending and access to credit.

Deteriorating Credit Outlook 

The U.S. consumers’ expectations for future credit availability deteriorated as they expect that credit access will become more difficult over the course of the year.

“The net share of respondents expecting it will be easier versus harder to obtain credit a year from now decreasing. Perceptions of credit access compared to a year ago also deteriorated somewhat,” the report said. 

It also said that U.S. households’ current financial situations deteriorated as many respondents reported that their households were worse off compared to a year ago, and they don’t expect their financial situation to improve in the year ahead. 

Lower Chances Of Job Loss

As per the survey, consumers saw a lower likelihood of a job loss, and higher likelihood of finding a job in the event of a job loss as labor market expectations saw modest improvements. 

The mean perceived probability of losing one’s job in the next 12 months decreased by 0.4 percentage point to 14.8%, remaining slightly above the trailing 12-month average of 14.6%.

Meanwhile, U.S. indices were trading in green on Monday. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up by 0.57%, the Invesco QQQ Trust ETF (QQQ) also rise 0.59%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) edged higher by 0.07%.

Retail sentiment around SPY trended in the ‘bearish’ territory amid ‘high’ message volumes. 

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