The latest Survey of Consumer Expectations shows consumers expect household spending to drop next year and inflation to ease, according to the Federal Reserve Bank of New York. File photo by Gary C. Casky/UPI |
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Oct. 11 (UPI) -- Consumer expectations and concerns about inflation eased a bit last month, but tumbled when it came to household spending, according to the latest New York Fed survey.
The Federal Reserve Bank of New York released September's Survey of Consumer Expectations on Tuesday showing consumers expect the inflation rate a year from now to be 5.4%. That is the lowest reading since September of last year, a decline from August when consumer inflation expectations hit 5.75% and a big drop from June when it peaked at 6.8%.
While short-term inflation expectations fell as the Federal Reserve has instituted a series of interest rate hikes, longer-term inflation expectations went up.
"In contrast, three-year-ahead inflation expectations rose slightly to 2.9% from 2.8% in August," the Federal Reserve Bank of New York said. "Median five-year-ahead inflation expectations ... increased by 0.2% to 2.2%."
As expectations about inflation eased last month, the outlook for household spending plummeted. Survey respondents said they see household spending growth of 6% next year, which is a big decline from August's 7.8% forecast. It is also the lowest level since January and the largest one-month decline since the survey started in June of 2013.
When it came to real estate, respondents expect the market to slow over the next year with home prices forecast to increase by just 2%.
"Home price growth expectations continued to decline in September and are now at their lowest levels since June 2020," the bank said in a statement.
However, consumers had better expectations when it came to credit. "Households' expectations about future credit access one year from now improved somewhat," the bank added.
The Survey of Consumer Expectations gauges 1,300 households' expectations about inflation, real estate and education. It also gauges gas prices, which consumers saw rising by half a percentage point over the next year, and food prices, which they forecast to surge by 6.9%.