Americans' inflation expectations drop to lowest level in 3 years, NY Fed survey shows
Slatestone Wealth chief market strategist Kenny Polcari says Americans are reconsidering what the CPI report means on 'Making Money.'
Americans are feeling more optimistic about the outlook of high inflation, according to a key Federal Reserve Bank of New York survey published Monday.
The median expectation among consumers is that the inflation rate will be up 3% one year from now, according to the New York Federal Reserve's Survey of Consumer Expectations, down from a high of 7.1% recorded in June 2022.
It marks the lowest reading since January 2021.
Consumers also anticipate that price growth will slow in the longer term, according to the survey. They projected that inflation will hover around 2.6% three years from now and at 2.5% five years from now.
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A man shops at a Safeway grocery store in Annapolis, Maryland, on May 16, 2022. (Jim Watson/AFP via / Getty Images)
Still, that remains above the Fed's 2% target, indicating that sticky inflation could be here to stay. By comparison, central bank policymakers projected in their latest economic forecasts that inflation will fall to 2.2% by 2025 and eventually drop to 2% in 2026.
Americans expect the cost of things like food and rent to fall over the next year, but they think the cost of a college education will rise.
The survey, which is based on a rotating panel of 1,300 households, plays a critical role in determining how Fed policymakers respond to the inflation crisis.
A FED PAUSE LIKELY WON’T HELP STRUGGLING CONSUMERS
That is because actual inflation depends, at least in part, on what consumers think it will be. It is sort of a self-fulfilling prophecy – if everyone expects prices to rise by 3% in the year, that
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