Skip to main content

Inquiring minds are diving into the New York Fed Survey of Consumer Expectations report for August.​

Image placeholder title

Median inflation expectations at both the one- and three-year horizons were unchanged at 3.0 percent for the third straight month. Median expected household income growth rebounded slightly to 2.7 percent, reversing a three-month decline. The outlook for household spending growth and year-ahead earnings growth also recovered from recent dips.

One Year Look-Ahead Household Income Growth Expectations

Image placeholder title

Income Projections July 2018

  • 25% Level: 0.80%
  • Median: 2.78%
  • 75% Level: 5.91%

One Year Look-Ahead Spending Expectations

Image placeholder title

Spending Projections July 2018

  • 25% Level: 0.48%
  • Median: 3.23%
  • 75% Level: 9.13%

One Year Look-Ahead Inflation Expectations

Image placeholder title

Inflation Projections July 2018

  • 25% Level: 1.19%
  • Median: 2.98%
  • 75% Level: 4.92%

Inflation Synopsis


The current year-over-year CPI is 2.9%.

The median expected CPI looking one year ahead is 2.98%. The high and low projections are 4.92% and 1.19% respectively.

Note: in the analysis below, I used the median inflation expectation as a comparison in all cases because the percentile inflation expectation is highly unlikely to correlate to the same income and spending groups.

Median Synopsis

The median income and spending projections are 2.78% and 3.23% respectively.

For the median household, income will not quite keep up with current inflation or expected inflation. Income palls short of expected inflation by 0.20 percentage points.

Spending will outstrip income by 0.45 percentage points.

25th Percentile Synopsis

The 25th percentile income and spending projections are 0.80% and 0.48% respectively.

For the 25th percentile household, income gains underperforms the median inflation projection by 2.18 percentage points. That grim assessment is likely on the mark.

This group expects to spend less than income by 0.32 percentage points.

75th Percentile Synopsis

The 75th percentile income and spending projections are 5.91% and 9.13% respectively.

The 75th percentile household expects to spend 3.22 percentage points above their expected income gain.

Counting on stock market gains are we?

Overall Assessment

The median person expects to scrape by, going a bit more in debt to maintain lifestyle.

The high end is likely counting on further stock market gains to propel spending.

The low end wants to save but expects to get hammered by inflation, a strong likelihood even compared to the low-end inflation assessment of 1.19%.

Mike "Mish" Shedlock