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The Survey of Consumer Expectations (SCE) contains information about how consumers expect overall inflation and prices for food, gas, housing, and education to behave.
Source: Federal Reserve Bank of New York
Photo: Courtesy “The New York Fed DSGE Model Forecast—December 2024“, Liberty Street Economics, Federal Reserve Bank of New York
NEW YORK—The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the January 2025 Survey of Consumer Expectations, which shows that inflation expectations were unchanged at the short- and medium-term horizons, and increased at the longer-term horizon. Commodity price expectations rose across the board, with the expected price change for gas, food, medical care, education, and rent all increasing. Labor market expectations were mixed, with job loss and job finding expectations both rising and unemployment expectations falling to the lowest level since July 2021. Household spending growth expectations also declined in January, hitting the lowest level seen in the last four years.
The main findings from the January 2025 Survey are:
Inflation
- Median inflation expectations were unchanged at 3.0% at both the one- and three-year-ahead horizons. Median five-year-ahead inflation expectations rose by 0.3 percentage point to 3.0% in January. This increase was driven primarily by respondents with a high-school education or less. The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) increased at the one- and five-year horizons and was unchanged at the three-year horizon.
- Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—was unchanged at the one-year horizon, declined at the three-year horizon, and increased at the five-year horizon.
- Median home price growth expectations rose by 0.1 percentage point to 3.2%. This increase was driven by respondents in the West census region. This series has been moving in a narrow range between 3.0% and 3.3% since August 2023.
- Year-ahead commodity price expectations rose across the board, increasing by 0.6 percentage point for the price of gas to 2.6%, 0.6 percentage point for the price of food to 4.6%, 1.0 percentage point for the cost of medical care to 6.8%, 0.2 percentage point for the cost of college to 5.9%, and 0.5 percentage point for rent to 6.0%.
Labor Market
- Median one-year-ahead earnings growth expectations increased by 0.2 percentage point to 3.0% in January. This series has been moving within a narrow range between 2.7% and 3.0% since January 2024.
- Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—decreased by 0.6 percentage point to 34.0%, the measure’s lowest reading since July 2021. The decline was driven by respondents with no college degree, those with an annual income below $100,000, and those above age 40.
- The mean perceived probability of losing one’s job in the next 12 months increased by 2.3 percentage points to 14.2%. This increase was broad based across demographic groups, but most pronounced for those over the age of 60. The mean probability of leaving one’s job voluntarily in the next 12 months also increased by 1.7 percentage points to 19.9%. This increase was most pronounced for those with an annual household income below $50,000.
- The mean perceived probability of finding a job in the next three months if one’s current job was lost increased by 1.3 percentage points to 51.5%. This increase was driven by those with an annual household income below $100,000.
Household Finance
- The median expected growth in household income increased by 0.2 percentage point to 3.0% in January. The series has been moving in a narrow range between 2.8% and 3.1% since August 2023.
- Median household spending growth expectations declined by 0.4 percentage point to 4.4%, its lowest reading since January 2021, but remains above pre-pandemic levels. The decline was broad-based across age, income, and education groups.
- Perceptions of credit access compared to a year ago improved in January, with the net share of households reporting it is easier versus harder to obtain credit than one year ago increasing. Expectations for future credit availability also improved.
- The average perceived probability of missing a minimum debt payment over the next three months decreased by 0.9 percentage point to 13.3%. This series remains above its 12-month trailing average of 13.0%.
- The median expected year-ahead change in taxes at current income level increased by 0.2 percentage point to 3.2%, but remains well below its 12-month trailing average of 3.9%.
- Median year-ahead expected growth in government debt increased by 0.1 percentage point to 6.0%. This reading is well below the series 12-month trailing average of 8.6%.
- The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months decreased by 0.2 percentage point to 25.0%.
- Perceptions about households’ current financial situations compared to a year ago deteriorated in January, with the net share of households reporting a worse versus better situation compared to a year ago rising. Similarly, year-ahead expectations about households’ financial situations also deteriorated in January.
- The mean perceived probability that U.S. stock prices will be higher 12 months from now increased by 0.5 percentage point to 40.3%.
About the Survey of Consumer Expectations (SCE)
The SCE contains 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. The SCE also provides measures of uncertainty regarding consumers’ outlooks. Expectations are also available by age, geography, income, education, and numeracy.
The SCE is a nationally representative, internet-based survey of a rotating panel of approximately 1,300 household heads. Respondents participate in the panel for up to 12 months, with a roughly equal number rotating in and out of the panel each month. Unlike comparable surveys based on repeated cross-sections with a different set of respondents in each wave, this panel allows us to observe the changes in expectations and behavior of the same individuals over time. For further information on the SCE, please refer to an overview of the survey methodology here, the interactive chart guide, and the survey questionnaire.
