The New York Fed Center for Microeconomic Data released its Survey of Consumer Expectations for December 2017.

The consumer survey is a one-year look ahead study of consumer expectations about inflation, home prices, jobs, and spending.

Here are some charts from the study.

Inflation Expectations

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Inflation expectations are useless. The Fed believes in them as do most economic writers.

Earnings Expectations

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Earnings expectations have been relatively stable, between 2 and 3 percent, since 2014.

Moving Expectations

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Moving expectations started trending lower in 2016 and slid for most of 2017. If accurate, this does not portend well for new and existing home purchases in 2018.

Unemployment Expectations

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Unemployment expectations started trending lower in August of 2016. At this stage in the recovery, this trend is likely a contrarian indicator.

Household Finance Expectations

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Once again, at this point in the recovery and with the stock market in a clear bubble, this is likely a contrarian indicator.

Household Spending Projections

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The New York Fed does not produce a good chart of spending projections, so I downloaded the data to create the chart in Excel.

The spending projection trends are very clear.

Household Spending Factors

  1. Jobs - Neutral to Negative (The rate of job creation peaked in 2015. Minimum wage hikes will likely be at the expense of jobs)
  2. Wage Growth - Neutral to Negative (Minimum wages are a plus, but it may be at the expense of jobs).
  3. Stock Market Returns - Negative (The bubble is obvious and will likely burst in 2018)
  4. Consumer Prices - Neutral to Negative (Unlike others, I see no major outbreak in prices. If oil declines as I expect, prices may come down or rise less).
  5. Savings Rate - Negative (I expect the savings rate to increase. 24% of millennials are still paying 2016 Christmas bills!)
  6. Moving - Negative (houses are not affordable and fewer people expect to move)

I find it curious that when it comes to spending projections the Fed places great faith in consumer confidence reports and none on its own survey.

Mike "Mish" Shedlock

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