Another survey has found a slight overall improvement in consumer attitudes toward the economy. The New York Federal Reserve Bank said that its monthly Survey of Consumer Expectations (SEC) for March showed increasingly positive attitudes toward income growth, employment, and access to credit. At the same time consumers appear more wary about the possibility of inflation and have moderated their outlook toward the growth of home prices.
Consumers' expectations about median earnings growth over the next six months had remained flat from the survey's inception in June 2013 but began to climb at the beginning of this year and rose to 2.4 percent in March, the survey's highest point, from 2.26 percent in February. The Fed said the expectation of higher wages increased among consumers everywhere but in the Midwest.
Another improvement was noted in consumer attitudes about keeping or if necessary finding a job. Respondents were asked a series of questions about losing or voluntarily leaving their jobs and the percent chance of finding an acceptable new position within three months. As might be expected there was wide variation across demographic groups, but the mean perceived chance of being laid off declined slightly to about 16 percent (it peaked at over 17 percent last fall), driven by a drop in perceived layoff risk among college graduates. The overall expectation of finding another job rose to 49 percent from 46.1 percent in February. The likelihood that one might quit voluntarily fell slightly as well, falling under 20 percent for the first time since September.
Expectations about home price increases have moderated since the beginning of the year. The January survey elicited a peak price increase projection of 4.64 percent. This dropped to 4.0 percent in February and to 3.81 percent in the most recent survey, matching the low point in October 2013. This pattern did not hold in the West where respondents expected a higher rate of increase.
Perceptions of credit availability improved slightly, with fewer people finding it harder to obtain credit today compared to a year ago. Debt delinquency expectations also declined slightly.
Concern about inflation rose, especially among groups with lower education. Consumers had a median expectation of a 3.20 percent rise in inflation over a one-year horizon and a 3.38 percent increase over three years. This is an increase from the 3.09 percent and 3.18 percent respectively reported in February.
A question about the likelihood of a respondent changing residence over the next year garnered a 20 percent positive response, virtually unchanged over the life of the survey. There is significant variation on a regional basis, however, with participants in the Northeast far less likely to anticipate a move (13.96 percent) than those in the West (22.31 percent.) This regional pattern has also been consistent; a third of westerners indicated they could relocate in one early survey edition.
The SEC is designed to provide information about how consumers expect overall inflation and its component prices to behave and to gather data about American attitudes toward job prospects, earnings growth, and other concerns. It also provides measures of uncertainty about the main economic outcomes. The survey is conducted on-line among a rotating panel of about 1,200 heads of household each of whom participates in the panel for up to twelve months, allowing survey managers to observe changes in expectations and behaviors over time.
