NY Fed Survey: Inflation Expectations Tick Up, Spending Plans Drop in November

Date : 12/09/2019 @ 4:32PM
Source : Dow Jones News

NY Fed Survey: Inflation Expectations Tick Up, Spending Plans Drop in November

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.

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