May consumer expectations signal higher inflation, improving labor market

• The May Survey of Consumer Expectations indicates consumers foresee higher levels of inflation along with an improving labor market, according to the New York Fed.
• The median 1-year inflation expectations increased by 0.6 percentage point to 4.0%, while median 3-year expectations increased from 3.1% to 3.6%, the highest level since August 2013.
• Recently, medium-term inflation expectations are rising at a slower pace than short-term expectations, inline with the May University of Michigan inflation expectations descending from its April peak.
• Inflation uncertainty is trending well above pre-COVID levels.
• Home and commodity 1-year price inflation expectations increased to a new series high.
• The median expected growth in household income rose by 0.4 percentage point to 2.8%, its highest level since January 2020.
• The labor market continues seeing signs of improvement as people continue finding employment more easily; the mean perceived probability of finding a job rose "sharply" to 54%, from 49.8% in the prior month, the largest M/M increase in the series.
• Previously (May 10), Consumers inflation fears climb to highest since 2013, New York Fed says