Consumers Remain Optimistic About the Economy

The Federal Reserve Bank’s June 2019 Survey of Consumer Expectations (SCE) shows an increase in short- and medium- term inflation expectations. However, respondents were generally more upbeat about their financial situation overall and about the labor market, with expectations about the U.S. unemployment rate, finding a job, and losing one’s job all improving.

The SCE is a nationally representative, internet-based survey of a rotating panel of approximately 1,300 household heads. Respondents participate in the panel for up to 12 months, with a roughly equal number rotating in and out of the panel each month. The survey contains information about 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 and their expectations about future spending and access to credit.

Other finding from the survey:

  • The mean perceived probability of losing one’s job in the next 12 months decreased to 13.5% from 14.7% in May, remaining below its trailing 12-month average of 14.4%.
  • The mean probability of leaving one’s job voluntarily in the next 12 months also decreased to 20.4% from 21.2%, remaining below its trailing 12-month average of 21.6%.
  • The mean perceived probability of finding a job (if one’s current job was lost) increased to a new series’ high of 63.7%, from its previous high of 61.5% reached in May. The increase was broad-based across age and education groups.
  • Median expected household income growth increased slightly from 2.8% in May to 2.9% in June, moving just above its trailing 12-month average of 2.8%.
  • Median household spending growth expectations decreased from 3.5% in May to 3.3% in June. Spending growth expectations have been volatile and exhibit seasonality.
  • The average perceived probability of missing a minimum debt payment over the next three months declined to 10.6% from 11.5% in May, reaching the lowest level since the start of the series in June 2013.
  • The mean perceived probability that the average interest rate on saving accounts will be higher 12 months from now than it is today decreased to 28.1% in June, continuing its downward trend since October 2018 and reaching its lowest reading since May 2015.
  • One-year ahead expectations as well as perceptions about households’ current financial situations improved in June, with larger shares of respondents expecting to be and reporting to be better off financially.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now declined to 38.8%, from 40.8% in May. This marks its fourth consecutive decrease and its lowest level since October 2016.

 

Survey of Consumer Expectations, June 2019

More detail available here.