Most Americans think the economy should be in good shape by this time next year

Minneapolis
CNN
—

New survey data released Monday by the Federal Reserve Bank of New York shows U.S. consumers are optimistic Inflation will continue to declineThe The labor market will remain strong And they will Keep spending more than they did before the pandemic.

The October survey of consumer expectations It paints a more positive picture than a survey by the New York Fed a month ago, when consumers were afraid of defaulting on their minimum debt because of the early stages of the Covid-19 pandemic.

In October, the average probability of missing the minimum loan fell to 11.99%, matching June’s reading and sitting well within pre-pandemic ranges.

consumer’ Expectations for inflation The one-year and five-year rates were both down 0.1 percentage points from the previous month, at 3.6% and 2.7%, respectively.

However, average inflation expectations over the three-year horizon remained unchanged at 3%, a one-year increase.

The Federal Reserve watches consumers’ inflation expectations closely because they can be a self-fulfilling prophecy: If consumers expect prices to be higher, they may now spend more and demand higher wages, and businesses may raise prices to match higher demand and wages. .

Recently, Central bank officials are nervous About deteriorating expectations. On Friday, a closely watched survey of consumers from the University of Michigan showed that sentiment about the current state of the economy was declining and inflation expectations were rising over the longer term.

On the revenue front, consumer expectations Wage growth The series saw a 0.2 percentage point drop to 2.83%, or a range of 2.8% to 3% since September 2021.

While consumers’ average perceived probability that they will lose their job in the next year has increased to 12.7%, they expect the country’s unemployment rate to remain low and their chances of finding another job have improved slightly to 56.6%.

Average expected growth in household income rose by one-tenth of a percentage point to 3.1%. In February 2020, the expected growth was 2.7%.

Spending expectations of 5.25% have fallen back slightly from a peak of 9% in May 2022. However, they are still higher than the pre-pandemic level of 3.1%.

Overall, more respondents to the New York Fed survey said their families are better off than they were this time last year. In the coming year, it was a bit more mixed, with nearly equal shares of consumers believing they are either better off or worse off financially than they are now.