Households’ inflation expectations declined in the short, medium and long term, according to the Federal Reserve Bank of New York’s most recent Survey of Consumer Expectations. Consumer debt delinquency expectations and expectations about households’ financial situation improved slightly, survey results showed.
Median inflation expectations decreased at all three horizons according to the May survey. One-year-ahead inflation expectations declined by 0.4 percentage point to 3.2%; three-year-ahead inflation expectations declined by 0.2 percentage point to 3.0%; and five-year-ahead inflation expectations declined by 0.1 percentage point to 2.6%.
Median inflation uncertainty, or the uncertainty expressed regarding future inflation outcomes, declined at the one-year horizon and was unchanged at the three- and five-year horizons. Median home price growth expectations decreased by 0.3 percentage point to 3%. This series has been moving in a narrow range between 3% and 3.3% since August 2023, the survey said. The decline was driven by respondents in the West and South census regions.
The median expected growth in household income increased by 0.1 percentage point to 2.7% in May, while remaining well below the trailing 12-month average of 3%. Median nominal household spending growth expectations declined by 0.2 percentage point to 5%, remaining just above the trailing 12-month average of 4.9%. Perceptions about households’ current financial situations compared to a year ago and expectations about year-ahead financial situations both improved slightly, with the net share of respondents reporting that their households are better off versus worse off and the net share reporting that they expect their households to be better off versus worse off both increasing.
Perceptions of credit access compared to a year ago improved, with a smaller share of households reporting it is harder to get credit, and a larger share reporting it is easier. Conversely, expectations for future credit availability deteriorated, with the share of respondents expecting it will be easier to obtain credit a year from now decreasing to 10.6% from 12.1%.
The average perceived probability of missing a minimum debt payment over the next three months decreased by 0.5 percentage point to 13.4%, the lowest level since January 2025. The decrease was driven by those with more than a high school diploma and those with household incomes over $50,000.
The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months decreased by 1.1 percentage points to 25.4%.
