NY Fed Survey: Inflation Expectations Tick Up, Spending Plans Drop in November
December 09 2019 - 11:32AM
Dow Jones News
By Michael S. Derby
Households marked up their expectations of future inflation in
November, even as they signaled plans to cut back on their
spending.
The New York Fed said Monday in its Survey of Consumer
Expectations for November that a long-running softness in what the
public foresees for future price pressures started to tick a little
higher. Three years from now, households see inflation at 2.5%,
from 2.4% in October, while one year from now, those surveyed see
inflation at 2.4%, little changed from the prior month.
The uptick in inflation expectations, while modest, is good news
for the Fed. Central bankers believe that where the public expects
inflation to go exerts a strong influence on where it is now. For
some time inflation expectations have been growing softer at a time
where inflation levels have already been well short of the Fed's 2%
target, having never sustainably achieved the goal since the target
was adopted in 2012.
Part of the case for the Fed's three rate cuts this year has
been to lift inflation. The uptick in inflation expectations comes
amid another round of great job market data, and if the inflation
expectations rise is sustained it could herald an uptick in actual
inflation over time.
On a less positive front, the New York Fed said that households
have a mixed view on future income and earnings, and are expecting
lower spending over time. In November, median one-year ahead
expected earnings gains ticked down 0.1 percentage point to 2.2%,
while median expected household income growth ticked up to 2.9%,
from 2.8% in October.
Expected spending fell "sharply" to 2.8% in November, from an
expected 3.3% rise the prior month. November's reading was the
lowest since September 2017 and the New York Fed said "the decline
was broad based across age, income and education groups."
Write to Michael S. Derby at michael.derby@wsj.com
(END) Dow Jones Newswires
December 09, 2019 11:17 ET (16:17 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.