Note

Expectations for inflation and spending hit record levels in May, New York Fed survey shows

· Views 56

Consumer expectations for inflation and spending in the year ahead both hit record levels in May, the same month prices rose at their fastest pace since late 1981, the New York Federal Reserve reported Monday.

The outlook for price gains in the coming year increased to 6.6% for the month, up 0.3 percentage points from April and tied with March for the highest rate on record for a survey that goes back to June 2013. That came even though three-year inflation expectations remained essentially unchanged at 3.9%.

At the same time, median household expectations for spending increases over the next 12 months soared to 9%, up a full percentage point from the previous month. That's up sharply from the 5.5% rate to start the year and nearly double the 5% expectation from a year ago.

Both increases came the same month that the consumer price index rose 1% from April and 8.6% from May 2021, the biggest gain since December 1981. Major increases in food, energy and shelter costs drove the gain and put added pressure on the Fed to raise interest rates.

Sentiment also dimmed about the stock market, which has been getting thrashed amid worries about rising inflation and a potential recession on the horizon.

Just 36.2% of respondents expect the market to be higher a year from now, a dip from the 37.9% reading in April and also a new series low.

In addition to the rising prices, consumers said it was harder to get credit.

The level of consumers saying it was more difficult to obtain financing jumped to 11.4%, up from about 9% the previous month, to the highest level since October 2020.

Job insecurity also grew, despite an increase of 390,000 in nonfarm payrolls for the month and about a 2 to 1 ratio of employment openings to available workers.

Those saying they feared losing their job rose to 11.1%, still well below the long-term average but the highest level since January. Expectations for the unemployment rate to be higher in a year increased to 38.6%, the highest level since February 2021.

Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.

FOLLOWME Trading Community Website: https://www.followme.com

If you like, reward to support.
avatar

Hot

No comment on record. Start new comment.