Inflation Expectations Decline Across All Horizons

[mahatmakanejeeves]

Source: Federal Reserve Bank of New York

PRESS RELEASE

Inflation Expectations Decline Across All Horizons

August 08, 2022

NEW YORK—The Federal Reserve Bank of New York's Center for Microeconomic Data today released the July 2022 Survey of Consumer Expectations, which shows substantial declines in short-, medium- and longer-term inflation expectations. Expectations about year-ahead price increases for gas and food fell sharply. Home price growth expectations and year-ahead spending growth expectations continued to pull back from recent series highs. Households' income growth expectations improved.

The main findings from the July 2022 Survey are:

Inflation

Median one- and three-year-ahead inflation expectations both declined sharply in July, to 6.2% and 3.2% from 6.8% and 3.6% in June respectively. Both decreases were broad based across income groups, but largest among respondents with annual household incomes under $50k and respondents with no more than a high school education. The measures of disagreement across respondents (the difference between the 75th and 25th percentiles of inflation expectations) increased at the one-year-ahead horizon and decreased noticeably at the three-year-ahead horizon.

{snip}

Read more: https://www.newyorkfed.org/newsevents/news/research/2022/20220808

[multigraincracker]

1. Seems that the strong dollar

would make imports cheaper.

[IronLionZion]

2. Thanks a lot Biden

and so soon after those jobs numbers on Friday. GOP must be so disappointed

[dchill]

7. Their friends in the media will cheer them up.

[Novara]

3. Thanks, president Biden!

[Dr. T]

5. At this rate,

Repuglicans are going to have to run on the substance their policies.

[elleng]

9. which they ain't got!!!

[KPN]

6. What's the relationship between past actual inflation and past surveys of consumer

expectations? Anyone have any insight to this?

Consumer expectations about future inflation rates and actual future inflation rates are not necessarily the same thing. This survey seems more relevant to how the public views the actions the Fed is taking to tame inflation than the actual inflation itself. Am I understanding this correctly?

[progree]

8. A Reuters article said that a large part of this expectation improvement was a result

of the drop in gasoline prices, and the expectation of a further drop, so happily, people are noticing and the word is getting out.

Yes, it's expectations. What matters is reality.

I'm afraid that the July CPI report, due Wednesday 830 AM ET is expected to show only a modest improvement -- a 12 month increase of 8.7%, an improvement over the 9.1% change reported a month ago.

More heartening is the expected month over month change of a 0.2% or 0.3% increase (based on 3 articles I read today), a vast improvement over the 1.3% change in June, and the other months of this year:

CPI monthly increases in % over the previous month:
monthly changes: https://data.bls.gov/timeseries/CUSR0000SA0?output_view=pct_1mth
Jan Feb Mar Apr May Jun
0.6 0.8 1.2   0.3 1.0 1.3

CPI index: https://data.bls.gov/timeseries/CUSR0000SA0

[KPN]

10. Thanks. Sounds like this survey measure is more useful for the Fed

than it is for consumers or investors. If or as long as consumer expectations are met, fed rate increases will likely be more palatable to the average observer.

[Tarheel_Dem]

11. K&R