US households expressed growing optimism about their financial prospects despite a slight uptick in inflation expectations, according to the Federal Reserve Bank of New York’s November 2024 Survey of Consumer Expectations. Released today, the report highlights shifting consumer sentiments on inflation, earnings, and broader economic trends.
Inflation expectations increased marginally across short-, medium-, and long-term horizons. One-year-ahead inflation expectations rose to 3.0%, while three-year and five-year expectations climbed to 2.6% and 2.9%, respectively. The survey noted growing disagreement among respondents, reflecting a divergence in views about future price changes. Commodity price expectations varied, with anticipated declines in gas, food, and rent costs, but increases in healthcare and education expenses.
While expectations for earnings growth improved, with the median one-year-ahead earnings growth rising to 3.0%, other labor market indicators showed signs of weakening. Perceptions of job security dipped, with a higher perceived likelihood of job loss and reduced confidence in finding new employment. The probability of voluntary job changes also declined, signaling potential caution among workers.
Consumer optimism about household finances strengthened in November. The median expected growth in household income increased to 3.1%, while household spending growth expectations fell to 4.7%, the lowest level since April 2021. Credit access perceptions improved slightly, with fewer households anticipating tighter credit conditions in the year ahead. Debt repayment confidence also improved, with a decline in the perceived probability of missing a minimum payment.
Expectations for government debt growth decreased sharply, reaching their lowest level since February 2020, while the perceived likelihood of higher interest rates on savings accounts rose. Confidence in the stock market increased modestly, with 40.4% of respondents expecting higher stock prices in the next year.
The Survey of Consumer Expectations provides critical insights into household perspectives on inflation, labor markets, and personal finances. Conducted with a rotating panel of 1,300 households, the survey offers a comprehensive view of changing economic expectations and behaviors over time.
