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Household income growth expectations declined. Households were also more pessimistic about their year-ahead financial situations and credit access.
Source: Federal Reserve Bank of New York
NEW YORK—The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the March 2025 Survey of Consumer Expectations, which shows that households’ inflation expectations increased at the short-term horizon, remained unchanged at the medium-term horizon, and ticked down at the longer-term horizon. Unemployment, job loss, and earnings growth expectations deteriorated. Household income growth expectations declined. Households were also more pessimistic about their year-ahead financial situations and credit access. Stock price expectations declined and reached the lowest level since June 2022.
The main findings from the March 2025 Survey are:
Inflation
- Median inflation expectations increased by 0.5 percentage point to 3.6% at the one-year-ahead horizon, were unchanged at 3.0% at the three-year-ahead horizon, and decreased by 0.1 percentage point to 2.9% at the five-year-ahead horizon. The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentiles of inflation expectations) increased at the one- and three-year-ahead horizons and was unchanged at the five-year-ahead horizon.
- Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—decreased at one- and five-year-ahead horizons and was unchanged at the three-year-ahead horizon.
- Median home price growth expectations decreased by 0.3 percentage point to 3.0% in March. This series has been moving in a narrow range between 3.0% and 3.3% since August 2023.
- Median year-ahead expected price growth increased by 0.1 percentage point for food to 5.2% (its highest level since May 2024), 0.7 percentage point for the cost of medical care to 7.9%, and 0.5 percentage point for rent to 7.2%. Median year-ahead price expectations fell by 0.5 percentage point for gas to 3.2% and 0.2 percentage point for the cost of college education to 6.7%.
Labor Market
- Median one-year-ahead earnings growth expectations fell by 0.2 percentage point to 2.8% in March, equaling its 12-month trailing average. The 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—jumped 4.6 percentage points to 44.0%, the highest reading since April 2020. The increase was broad-based across age, education, and income groups.
- The mean perceived probability of losing one’s job in the next 12 months increased by 1.6 percentage points to 15.7%, the highest level since March 2024. The increase was largest for respondents with annual household incomes below $50,000. The mean probability of leaving one’s job voluntarily in the next 12 months increased by 0.4 percentage point to 18.0%, remaining far below the 12-month trailing average of 19.7%.
- The mean perceived probability of finding a job if one’s current job was lost decreased by 0.1 percentage point to 51.1%.
Household Finance
- The median expected growth in household income decreased by 0.3 percentage point to 2.8% in March, falling below its 12-month trailing average of 3.0%. The decline was most pronounced for respondents with at most a high school degree and for those with annual household incomes under $50,000.
- Median household spending growth expectations declined by 0.1 percentage point to 4.9%.
- Perceptions of credit access compared to a year ago showed a larger share of households reporting it is harder to get credit. Expectations for future credit availability also deteriorated, with a larger share of respondents expecting it will be harder to obtain credit in the year ahead.
- The average perceived probability of missing a minimum debt payment over the next three months decreased by 1.0 percentage point to 13.6%, remaining slightly above the 12-month trailing average of 13.4%.
- The median expectation regarding a year-ahead change in taxes at current income level decreased by 0.2 percentage point to 3.2%.
- Median year-ahead expected growth in government debt decreased by 0.4 percentage point to 4.6%, the lowest reading of the series since its start in June 2013.
- The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months increased by 0.7 percentage point to 26.1%.
- Perceptions about households’ current financial situations compared to a year ago deteriorated slightly, with a larger share of households reporting a worse financial situation compared to a year ago. Year-ahead expectations about households’ financial situations also deteriorated in March. The share of households expecting a worse financial situation in one year from now rose to 30.0%, the highest level since October 2023.
- The mean perceived probability that U.S. stock prices will be higher 12 months from now dropped by 3.2 percentage points to 33.8%, the lowest level since June 2022.
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.
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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 FAQs, the interactive chart guide, and the survey questionnaire.
