Survey of Consumer Expectations: Inflation Expectations Continue Decline at the Short- Medium-, and Long-Term Horizons

September 12, 2022 — The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the August 2022 Survey of Consumer Expectations, which shows that inflation expectations continued to decline across all horizons. Expectations about year-ahead price increases for gas also continued to decline, with households now expecting gas prices to be roughly unchanged a year from now. Home price growth expectations fell sharply, and expectations of future credit access deteriorated. Consumers were more optimistic about their future household income and financial situations.

The main findings from the August 2022 Survey are:


  • Median one- and three-year-ahead inflation expectations continued their steep declines in August: the one-year measure fell to 5.7% from 6.2% in July, while the three-year measure fell to 2.8% from 3.2%. The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) increased to a new series high at the one-year horizon but decreased at the three-year horizon.
  • Median five-year-ahead inflation expectations, which have been elicited in the monthly SCE core survey on an ad-hoc basis since the beginning of this year and were first published in July 2022, also declined to 2.0% from 2.3%. Disagreement across respondents in their five-year-ahead inflation expectations also declined in August.
  • Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—decreased at the short-term horizon and was unchanged at the medium-term horizon.
  • Median home price expectations declined sharply by 1.4 percentage points to 2.1%, its lowest reading since July 2020, and falling below pre-pandemic levels. The decline was broad based across demographic groups and geographic regions. Home price expectations have now fallen by nearly two-thirds since the April 2022 reading of 6.0%.
  • Expectations about year-ahead price changes fell by 1.4 percentage points for gas (to 0.1%), 0.8 percentage point for food (to 5.8%), and 0.3 percentage point for rent (to 9.6%). The median expected change in the cost of medical care rose by 0.1 percentage point (to 9.3%) and was unchanged for college education at 8.4%.

Labor Market

  • Median one-year-ahead expected earnings growth remained unchanged at 3.0% in August for the eighth consecutive month.
  • Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—decreased by 0.2 percentage point to 40.0%.
  • The mean perceived probability of losing one’s job in the next 12 months decreased by 0.7 percentage point to 11.1%. Similarly, the mean probability of leaving one’s job voluntarily in the next 12 months decreased by 0.9 percentage point to 18.5%, its lowest reading since March 2021.
  • The mean perceived probability of finding a job (if one’s current job was lost) increased to 57.2% from 55.9% in July. The increase was most pronounced for those with a high-school education or less.

Household Finance

  • The median expected growth in household income increased by 0.1 percentage point to 3.5% in August, a new series high.
  • Median household spending growth expectations increased by 1.0 percentage point to 7.8%. The increase was driven by those with a high-school degree or less.
  • Perceptions of credit access compared to a year ago deteriorated, with the share of households reporting it is harder to obtain credit than one year ago increasing to a new series high. Similarly, expectations for future credit availability also deteriorated, with the share of respondents expecting it will be harder to obtain credit in the year ahead increasing to a new series high.
  • The average perceived probability of missing a minimum debt payment over the next three months increased by 1.4 percentage points to 12.2%, its highest reading since May 2020. This increase was broad based across demographic groups.
  • The median expectation regarding a year-ahead change in taxes (at current income level) decreased by 0.3 percentage point to 4.5%.
  • Median year-ahead expected growth in government debt decreased by 0.2 percentage point to 10.4%, its lowest reading since November 2020.
  • The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months was unchanged in August.
  • Perceptions about households’ current financial situations compared to a year ago improved with fewer households reporting a worse situation compared to a year. Year-ahead expectations about households’ financial situations also improved, with fewer households expecting to be worse off a year from now.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now increased by 2.1 percentage points to 36.4%.

About the Survey of Consumer Expectations (SCE)

The SCE 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. The SCE also provides measures of uncertainty regarding consumers’ outlooks. Expectations are also available by age, geography, income, education, and numeracy.

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. Unlike comparable surveys based on repeated cross-sections with a different set of respondents in each wave, this panel allows us to observe the changes in expectations and behavior of the same individuals over time. For further information on the SCE, please refer to an overview of the survey methodology here, the interactive chart guide, and the survey questionnaire.