Consumer expectations for inflation fell for the second month in a row, according to the New York Fed’s survey of consumer expectations for August.
- The one-year measure fell to 5.7% in August, this is down 0.5 percentage points from July and is down 1.1 percentage points from the high we saw in June.
- The three-year measure fell to 2.8% from 3.2%.
Home Prices Fall. Not surprisingly, median home price expectations saw a big drop to 2.1%, which is down 1.4 percentage points from the prior month and is the lowest reading since July 2020.
- Rents saw a slight drop of 0.3 percentage points to 9.6%.
Declines Across The Board. The two major consumer categories saw declines in August with gas prices seeing the biggest drop with a 1.4 percentage points decline to 0.1% and food fell 0.8 percentage points to 5.8%.
Household Spending. There were two areas where consumers expected growth over the next year: household spending and income.
- Median household spending growth expectations increased by 1.0 percentage points to 7.8%.
- Median expected growth in household income increased by 0.1 percentage point to 3.5% in August, a new series high.
Bottom Line: Consumers are expecting inflation to slow but they are expecting prices, spending, and incomes to increase over the next year.
