U.S. consumers have reduced their expectations for inflation on the the one-year time horizon, but have raised them for the three-year timeframe, according to the New York Fed's April Survey of Consumer Expectations. Consistent with elevated inflation, they're also expecting their spending within the next year to rise faster than their incomes.
Median inflation expectations decreased at the one-year horizon to 6.3% from 6.6% in March. Median three-year inflation expectations, meanwhile, rose by 0.2 percentage point to 3.9%. Both measures remain elevated, but are 0.3 percentage points below their series high, the NY Fed's Center for Microeconomic Data said.
Housing price inflation may have peaked. The median home price expectations were unchanged at 6.0%, though they're still elevated from prepandemic levels.
Median one-year-ahead expected earnings growth was unchanged at a series high of 3.0% in April.
The expected growth in household income, at median, increased by 0.1 percentage point to 3.1% in April, while median household nominal spending growth expectations rose by 0.3 percentage point to 8.0%, a new series high.
While the Federal Reserve tightens policy in an effort to tamp down demand and bring it more into balance with supply, consumers are saying access to credit has already deteriorated. More survey respondents said it's harder to obtain credit than it was a year ago. And expectations for future credit availability also eroded.
On the bright side, the mean perceived probability of losing one's job in the next 12 month dropped by 0.3 percentage point to 10.8%, matching the series low recorded in February 2022.
Personal spending rose at a faster pace than income in March as PCE price index accelerated