The Federal Reserve Bank of New York’s Center for Microeconomic Data released the January 2018 Survey of Consumer Expectations on Monday.

According to the Fed, the survey shows "continued improvement in expectations about households’ year-ahead financial situation and credit availability, and robust expected earnings growth. Short- and medium-term inflation expectations fell slightly."

Consumers expect to make 2% to 3% more next year than they did last year. To the Fed, this qualifies as "continued optimism" even though inflation expectations trend lower.

Inflation Expectations

Image placeholder title

Robust Earnings Growth

The Fed says consumers expect "robust earnings growth".

Robust Defined

By my calculation, consumers expect their purchasing power to decline between 3 and 59 basis points depending on whether one measures by the median point expected or the median point predicted.

The Fed might call this robust, but I believe the Fed failed to ask consumers if they agreed with the Fed's definition.

Spending Projections

Image placeholder title

Each month, I download the spending projections to produce my own chart.


  • The median spending percentile projection declined from 2.89% to 2.85%.
  • The 25th percentile projection declined from 0.84% to 0.29%.
  • Hooray! the 75th percentile spending projection jumped from 6.47% to 8.08%.

Consumer Sentiment

Downtrends are clear in all of the categories.

Amusingly, the Fed does not believe its own survey. Instead, former Fed Chair Janet Yellen frequently cited the Consumer Conference Board and the University of Michigan surveys as a purveyor of good news for consumer spending.

The Fed would rather extrapolate various feel good measures than pay attention to its own survey.

Inflation Expectations Nonsense

The idea that inflation expectations matter is ridiculous, except in cases of extremely high inflation or hyperinflation.

In Venezuela, people will spend every cent they get as fast as they get it, assuming, of course, that there is anything to buy.

In every other case, consumers' expectations of where prices will go is meaningless.

No one will buy an extra toaster or coat they do not need. There is only so much food one can store, even with a freezer. A car holds precisely one tank of gas. Consumers will not rent another house or have a second appendectomy just because they expect prices to rise.

Yet, the Fed places great faith in such nonsense.

The Fed may as well ask consumers if the man in the moon looks more like Putin, ZeroHedge, or me. The answer would be equally meaningful.

Mike "Mish" Shedlock

NY Fed Study Shows Household Spending Projections Continue to Slide

Every month, the New York Fed conducts a household survey of consumer expectations. Let's investigate the data.

Consumer Spending Expectations Down Again: Dear Fed, Why Don’t You Believe Your Own Survey?

Fed Chair Janet Yellen keeps citing consumer confidence and jobs as reasons consumer spending and inflation will pick up.

Consumer Spending Projections

Every month the NY Fed surveys consumers as to what they will spend in the upcoming year. The Downtrend is still intact.

Consumer Spending Expectations Continue to Decline: Feelin’ Wealthy, Dudes?

Despite the two-month rise in consumer spending, consumer spending expectations as measured by the Federal Reserve Bank of New York (FRBNY) Survey of Consumer Expectations continue to drop.

Consumer Expectations: Home Prices, Spending, Household Income, Inflation

Every month, the NY Fed conducts a survey of consumer expectations. The lead chart is from the Fed, I created the others

Household Income and Spending Projections vs Current and Projected CPI

Every month the Fed does a survey of consumer expectations. Let's compare the CPI to what consumers say they will do.

Spending, Inflation, Income Expectations: Consumers Expect No Improvement

A Fed study of consumer expectations projects a rise in spending but no overall economic improvement a year from now.

One Year Look-Ahead Expectations: Household Income, Inflation, Spending

Every month, the NY Fed conducts a survey of consumer expectations. The top chart is from the Fed, I created the others.

Philadelphia Fed Survey Strongest Since 1984

The Philadelphia Fed February 2017 Manufacturing Business Outlook Index jumped from 23.6 in January to 43.3 in February. Bloomberg Econoday notes this is the strongest reading since 1984.