In a recent survey conducted by the Federal Reserve Bank of New York's Center for Microeconomic Data, the July 2024 Survey of Consumer Expectations, it was found that inflation expectations remained steady in the short- and longer-term horizons. However, at the medium-term horizon, inflation expectations experienced a sharp decline, reaching a new series low. Additionally, the survey revealed mixed labor market expectations and an upward trend in delinquency expectations.

According to the survey, the median one- and five-year-ahead inflation expectations remained unchanged in July at 3.0% and 2.8% respectively. However, the median three-year-ahead inflation expectations saw a significant decline of 0.6 percentage points, reaching a series low of 2.3%. This decline was particularly notable among respondents with a high-school education or less and those with annual household incomes below $50,000.

The survey also indicated that inflation uncertainty, which measures the uncertainty expressed regarding future inflation outcomes, remained unchanged across all time horizons. Median home price growth expectations remained steady at 3.0% in July.

When it comes to labor market expectations, the survey showed a decline of 0.3 percentage points in median one-year-ahead expected earnings growth, which now stands at 2.7%. This series has been fluctuating within a narrow range since January 2024. Mean unemployment expectations, which reflect the probability of a higher U.S. unemployment rate one year from now, decreased by 1.0 percentage point to 36.6%. Meanwhile, the mean probability of losing one's job in the next 12 months decreased slightly by 0.5 percentage points to 14.3%.

On the other hand, the survey revealed an increase in the mean perceived probability of leaving one's job voluntarily in the next 12 months, reaching its highest reading since February 2023 at 20.7%. However, the mean perceived probability of finding a new job, if one's current job was lost, decreased by 0.9 percentage points to 52.5%.

Household income expectations remained stable, with the median expected growth in household income unchanged at 3.0% in July. However, median household spending growth expectations saw a decrease of 0.2 percentage points, reaching its lowest reading since April 2021 at 4.9%.

The survey also highlighted changes in credit access and debt payment expectations. Perceptions of credit access compared to a year ago deteriorated, with more households reporting it was harder to obtain credit. Yet, expectations for future credit availability improved, with fewer respondents expecting it to be harder to obtain credit in the year ahead. The average perceived probability of missing a minimum debt payment over the next three months also increased by 1.0 percentage point to 13.3%, indicating heightened concerns in this area.

The survey findings also shed light on expectations regarding taxes, government debt, and household financial situations. The median expectation for a year-ahead change in taxes declined by 0.3 percentage points to 4.0%. Median year-ahead expected growth in government debt remained unchanged at 9.3% in July. Furthermore, perceptions about households' current financial situations compared to a year ago improved slightly, while year-ahead expectations about households' financial situations deteriorated.

The survey serves as a valuable tool for understanding consumer expectations regarding overall inflation, prices for essential goods and services, job prospects and earnings growth, spending patterns, and access to credit. It provides insight into how different demographic groups perceive these aspects and captures their levels of uncertainty.

Conducted among a nationally representative panel of approximately 1,300 household heads participating for up to 12 months, the survey allows for observation of changes in expectations and behaviors over time. This unique longitudinal approach provides a comprehensive understanding of consumer sentiment and economic trends.

For further details on the survey methodology and complete findings, refer to the overview of the survey's methodology, the interactive chart guide, and the survey questionnaire.

Overall, the July 2024 Survey of Consumer Expectations highlights stable inflation expectations amidst a decline in the medium-term horizon. Mixed labor market outlook, fluctuating household spending expectations, and changes in credit access and debt payment perceptions signify a dynamic economic environment. These findings provide important insights into consumer sentiment and could impact future policy decisions.