NY Fed Survey: Inflation Expectations Stable but High, Consumer Spending Declines

Inflation Expectations Overview

• 🎯 The New York Fed's survey of consumer expectations shows inflation expectations remained unchanged but at an elevated level.
• 📈 One-year, three-year, and five-year inflation expectations were unchanged, holding towards the higher end of their typical ranges.

Shifting Price Perceptions

• ⛽ Despite falling gas prices, consumers' perception of gasoline costs increased by 1.1% in the survey.
• 🍎 Food prices also saw an increase in consumer expectations.
• 🏥 Medical care costs were perceived to have risen, reaching their highest point since May 2024.

Consumer Sentiment and Financial Outlook

• 📉 Unemployment expectations rose to 5.4%, the highest since September 2023, indicating growing concern about job security.
• 💰 Expectations for spending growth increased by 0.6% to 5%.
• ⚠️ However, concerns about missing a debt payment surged to the highest level since April 2020, highlighting financial stress.
• 😟 27.4% of households anticipate a worse financial situation in one year, the highest percentage since November 2023.

Consumer Spending Trends

• 🛍️ According to the CNBC NRF February retail monitor, consumer spending declined for the second consecutive month, excluding auto and gas.
• 📉 Retail spending decreased by 0.2% in February, following a 1.07% drop in January, marking the first back-to-back monthly declines.
• 📊 The spending decline was broad-based, affecting nine out of twelve sectors, with seven sectors experiencing declines in both January and February.