US Inflation Expectations Surge to New Highs in May

Despite the Fed’s strong efforts on peddling the “transitory” narrative, it appears that an increasing number of US consumers are falling off the bandwagon and are no longer buying into it.

The latest Federal Reserve Bank of New York’s Survey of Consumer Expectations for the month of May showed that the median respondent expects inflation levels to reach 3.6% over the next three years, compared to a 3.1% forecast in April. This marked the highest level since August 2013. Similarly, the one-year-ahead inflation expectations surged by 0.6 percentage points to 4% in May, marking the seventh straight month of increases and a new record-high.

The survey also found that average year-ahead home price change forecasts reached a series-high for the third consecutive month, rising 0.7 percentage points to 6.2% in May. The latest reading is significantly above the median of 2.3% noted throughout 2020.

At the same time, mean unemployment expectations— which measure the average probability of the US unemployment rate being higher within a year— fell from 34.6% to a new low of 31.9% last month. Similarly, the mean perceived probability of losing one’s job in the next year also fell to a new low of 12.6%, while the median expected growth in household income jumped by 0.4 percentage points to 2.8%— the highest since January 2020.

Information for this briefing was found via The Federal Reserve Bank of NY. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Leave a Reply