US inflation expectations remain unchanged in the short term, increased in the medium term and decreased in the longer term, according to the March 2024 Survey of Consumer Expectations released by the Federal Reserve Bank of New York’s Centre for Microeconomic Data.

Labour market expectations are mixed as well. While expectations about earnings growth and a rise in the unemployment rate were unchanged, respondents were more pessimistic about losing their job and finding a new job.

Though household finance perceptions and expectations were largely unchanged, the perceived probability of missing a minimum debt payment rose to its highest level since the onset of the COVID-19 pandemic.

For the third consecutive month in March, median one-year ahead inflation expectations remained unchanged at 3 per cent. In contrast, the median three-year ahead inflation expectations increased to 2.9 per cent from 2.7 per cent, whereas the median five-year ahead decreased to 2.6 per cent from 2.9 per cent.

Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—was unchanged at the one-year ahead horizon, rose slightly at the three-year ahead horizon, and declined marginally at the five-year ahead horizon.

Median year-ahead expected price changes increased for all goods in the survey.

Median one-year ahead expected earnings growth was unchanged at 2.8 per cent for the second consecutive month. Mean unemployment expectations—or the mean probability that the US unemployment rate will be higher one year from now—remained essentially unchanged at 36.2 per cent, below the series 12-month trailing average of 38.6 per cent.

The mean perceived probability of losing one’s job in the next 12 months increased by 1.2 percentage point to 15.7 per cent. This is above pre-pandemic levels and the highest reading since September 2020.

The mean probability of leaving one’s job voluntarily in the next 12 months also increased by 1.1 percentage points to 20.6 per cent, above the series 12-month trailing average of 18.9 per cent.

The mean perceived probability of finding a job (if one’s current job was lost) decreased for the third consecutive month to 51.2 per cent in March from 52.5 per cent in February, the lowest reading in almost three years, and well below its February 2020 pre-pandemic level of 58.7 per cent.

Median expected growth in household income was unchanged at 3.1 per cent in March. Median household spending growth expectations declined by 0.2 percentage point to 5 per cent.

Median year-ahead expected growth in government debt increased to 9.6 per cent from 9.3 per cent in February.

Fibre2Fashion News Desk (DS)

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