In September, US consumers' inflation expectations for the medium- and long-term horizons witnessed an uptick, according to a report from the Federal Reserve Bank of New York. Specifically, the median three-year inflation outlook increased to 2.7% last month, a rise from the prior 2.5%. Similarly, the five-year inflation metric rose to 2.9%, compared to its previous level of 2.8%.
However, the one-year inflation outlook remained stable at 3%, with price expectations for college costs remaining unchanged. Consumer expectations also showed varied trends: while food price expectations have increased, there was a notable decline in anticipated prices for gas, medical care, and rent.
Additionally, the latest data released by the Bureau of Labor Statistics indicated that US consumer inflation surged at a rate faster than anticipated in September, both on a month-to-month basis and year-over-year. In terms of housing, the median home price growth projections experienced a slight dip of 0.1 percentage point to reach 3% last month.
Turning to earnings, the year-ahead earnings growth outlook reduced by 0.1 percentage point to 2.8%. Conversely, the perceived probability of the US unemployment rate being higher one year from now decreased by 1.5 percentage points, landing at 36.2%. Interestingly, the mean perceived probability of losing one’s job stayed steady at 13.3%.
Yet, the likelihood of voluntarily leaving one’s job increased, rising to 20.4% from the previous figure of 19.1%. When examining growth outlooks for household income and spending, both indices dropped by 0.1 percentage point, settling at 3% and 4.9%, respectively. Notably, the average perceived probability of failing to meet a minimum debt payment in the upcoming three months soared to its highest level since April 2020, as indicated by the New York Fed survey. In a significant monetary policy move, the central bank's monetary policy committee recently slashed its benchmark lending rate by 50 basis points.
Looking ahead, the probability of policymakers opting to cut interest rates by an additional 25 basis points next month escalated to an impressive 98% on Tuesday, up from approximately 84% the previous day, based on insights drawn from the CME FedWatch tool..