US Consumers’ Inflation Expectations Rise, Spending Growth Projections Highest in 9 Years

A young latin woman sitting, holding receipts and looking at them with a worried face.
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U.S. consumers’ short- and medium-term inflation expectations rose in February, reversing some of the previous month’s sharp declines according to the Federal Reserve Bank of New York. This data comes from the February 2022 Survey of Consumer Expectations, released March 14. On the other hand, unemployment and job finding expectations improved in a bit of good economic news.

See: Experts: Here’s When the Surge in Inflation Could End
Find: 17% of Small Businesses Fear Going Out of Business in 2022 — How They Can Combat Inflation and Retain Employees

Median one-year-ahead inflation expectations increased to 6% in February from 5.8% in January, matching its Nov. 2021 high, according to the New York Fed.

Consumers’ three-year-ahead inflation expectations ticked up by 0.3% to 3.8%.

Median home price expectations, on the other hand, declined to 5.7% from 6%. The decline was most pronounced for respondents without a college education.

Meanwhile, all commodity price change expectations increased in February — with expectations about year-ahead price changes for food and gas increasing by 3.3% and 1.5% to 9.2% and 8.8%, respectively.

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In addition, anticipated changes in the costs of medical care and college education also increased to 9.6% and 9%, from 9.5% and 7.3%, respectively.

U.S. consumers’ expected earnings growth was unchanged for the second consecutive month — at 3% in February — and remains above its 12-month trailing average of 2.6%. Unemployment expectations — or the mean probability that the U.S. unemployment rate will be higher one year from now — decreased to 34.4% from 35.9%.

The perceived probability of losing one’s job in the next 12 months declined by 0.8% to 10.8%, reaching a new series low. The mean probability of leaving one’s job voluntarily in the next 12 months also decreased to 18.9% from 19.3%.

In terms of household finances, spending growth expectations increased sharply to 6.4% from 5.5% in January, reaching a new series high since the start of the series in June 2013.

Expectations about future credit availability and credit access deteriorated, according to the survey. The average perceived probability of missing a minimum debt payment over the next three months decreased by 0.8 percentage point to 9.2%, a new series low, however.

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The Survey of Consumer Expectations (SCE) examines 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, as well as their expectations about future spending and access to credit.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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