Business

Inflation expectations surge, hitting new high for New York Fed survey

Today News ||

Despite the Federal Reserve’s assurance that current inflation pressures won’t last, consumers see things differently, according to a survey Monday from the central bank’s New York district.

The June Survey of Consumer Expectations showed that median inflation expectations over the next 12 months jumped to 4.8%, a 0.8 percentage point rise from May and the highest reading in history for a series that goes back to 2013.

While the outlook for the next three years remained unchanged at 3.6%, that is still well above the 2% level that the Fed considers healthy for a growing economy.

Ads

Central bank officials have been insistent that the recent inflation spike won’t last. They projected at their June meeting that their preferred gauge would show a 3% gain in 2021 but then recede to 2.1% in subsequent years and settle around the target range thereafter.

Customers shop for produce at a supermarket on June 10, 2021 in Chicago, Illinois.

Scott Olson | Getty Images

A Fed report released Friday that Chairman Jerome Powell will present to Congress this week reiterated the central bank’s position that the current inflationary pressures are “transitory” and largely the result of supply chain bottlenecks and other factors likely to abate as the economy returns to its post-pandemic normal.

RELATED:  Mastercard SpendingPulse: November holiday sales up 5.1%

More inflation indicators are on the way this week. The June consumer price index, which factors less into the Fed’s decision-making than the personal consumption expenditures price index, is expected to show a 5% year-over-year gain, matching the May level, which was the highest since August 2008. Stripping out volatile food and energy prices, the CPI is projected to rise 4%, up from 3.8% for what would be the highest since January 1992.

Consumers surveyed by the New York Fed expect the home price acceleration to continue at a 6.2% annual pace, the same as in May, though the uncertainty range around that projection was the highest in series history.

Workers see earnings rising by 2.6% on a 12-month basis, the highest since the pandemic began in March 2020.

Expectations that the unemployment rate will be higher in a year fell to 30.7%, the lowest in series history.

Become a smarter investor with CNBC Pro.
Get stock picks, analyst calls, exclusive interviews and access to CNBC TV.
Sign up to start a free trial today.

More Economy Business News Updates of Today Check Below

Today News || Business Today || World News || Headlines Today || Health || Technology News || Education News

Source

Tags
Show More

Related Articles

Back to top button
Close