Inflation Expectations Tumble To Lowest Since Jan 2021, As Do Wage And Spending Growth, In Latest NY Fed Survey

Inflation Expectations Tumble To Lowest Since Jan 2021, As Do Wage And Spending Growth, In Latest NY Fed Survey

After a few months of late summer increases in the 1-Year inflation expectation as tracked by the NY Fed’s monthly consumer survey, December saw the third consecutive decline in this series which traditionally is also a proxy for the price of oil, and which last month dropped to the lowest since Jan 2021. The drop in 1 year inflation expectations was matched by moves in the other series, as both the 3 and 5 year inflation expectations also dropped notably in the last month of the year. And while that would be great news in isolation, it wasn’t isolated, because as the NY Fed also found, the disinflation data is actually the “bad kind” since the December survey found that earnings growth and spending growth expectations also decreased to their lowest recorded levels since 2021.

Here are some more details: as shown in the chart below, inflation expectations at the one-year horizon decreased to 3.01% in December from 3.36% in November, while median inflation expectations at the three- and five-year ahead horizon also dropped: to 2.6% from 3.0% at the three-year ahead horizon, and to 2.5% from 2.7% at the five-year ahead horizon.

The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) increased at the one-year ahead horizon, and decreased at the three-year and five-year ahead horizons.

Amusingly, inflation views among those over age 60 retreated to a fresh three-year low, while every age group was also at or near a multi-year low. One almost wonders just who are these people the NY fed “randomly” calls

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