U.S. consumers expect spending to outpace income growth in year ahead

 

• U.S. consumers expect to spend more in the year ahead despite expectations for flat income and earnings growth, according to the New York Fed's November 2020 Survey of Consumer Expectations.
• That contrasts with the October survey that expected spending to slow along with income growth.
• Households' year-ahead spending growth expectations sharply rose to 3.7% in November, the highest level recorded in more than four years.
• The labor outlook is mixed, with deteriorating expectations about the unemployment rate and improving expectations for job security.
• Unchanged for the fifth straight month, median one-year ahead earnings growth remained flat at 2.0%, below its 2019 average level of 2.3%. The median expected household income growth also stayed unchanged in November at 2.1%, well below its 2019 average of 2.8%
• The mean perceived probability of losing one’s job in the next 12 months decreased for the third straight month from 15.5% in October to 14.6% in November, still slightly above its 2019 average of 14.3%.
• Home price expectations marked their first decline since April 2020. Median year-ahead home price change expectations ticked down 0.1 percentage point to 3.0% in November.
• Median expected household income growth was unchanged at 2.1% in November, below its 2019 average of 2.8%.
• Median inflation expectations increased at both the short and medium-term horizons, while uncertainty and disagreement about future inflation remain elevated.
• Median inflation expectations increased 0.2 percentage point in November to 3.0% at the one-year horizon and increased 0.1 percentage point to 2.8% at the three-year horizon.