thlsu.com.

On Tuesday, according to the latest consumer survey data from the Federal Reserve Bank of New York, the three-year inflation expectation for September rose to 2.7%, up from 2.5% in August; the five-year inflation expectation increased to 2.9%, up from 2.8% in August; however, the short-term inflation expectation for one year remained stable at 3%. The increase in three-year and five-year inflation expectations was most pronounced among respondents with the highest level of education being high school. Overall, however, people's inflation expectations remain relatively stable.

In September, by category, consumer inflation expectations were as follows:

Respondents expected a 3.4% increase in gasoline prices over the next 12 months, the lowest expected increase in two years, down by 0.2 percentage points from August.

Food inflation is expected to be 4.5%, up by 0.1 percentage point from August, after the inflation expectation for this category dropped to the lowest level since before the COVID-19 pandemic in August.

Expectations for rent inflation decreased by 1 percentage point to 6.3%. The expectation for the growth in median house prices decreased by 0.1 percentage point to 3%. Since August 2023, this reading has been fluctuating narrowly between 3.0% and 3.3%.

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The expected increase in college costs is 5.9%, unchanged from the August forecast.

Expectations for medical costs decreased by 1.4 percentage points to 6.6%, the lowest reading since February 2020.

Regarding the labor market survey in September:

The median expected income growth for the next year decreased by 0.1 percentage point to 2.8%. The current reading is consistent with the average value over the past 12 months.The average expectation of unemployment, which is the average probability of the U.S. unemployment rate increasing in the next year, decreased by 1.5 percentage points to 36.2%. This decline is widespread across all levels of education and household income groups.

The average perceived probability of losing one's job within the next 12 months remained unchanged, staying at 13.3%.

The average probability of voluntarily leaving one's job within the next 12 months increased from 19.1% to 20.4%, with the most significant increase observed among respondents under the age of 40.

The average perceived probability of finding a new job if the current job is lost rose from 52.3% in August to 52.7% in September. This data is still below the average of 53.6% over the past 12 months.

In September, the expectation of U.S. households potentially falling behind on debt payments rose to the highest level since April 2020, during the early difficult period of the COVID-19 pandemic. Specifically, the expected probability of being unable to pay the minimum debt for the next three months increased to 14.2%, marking a rise for the fourth consecutive month, up from 13.6% in August. The rise in debt delinquency expectations is mainly driven by middle-aged respondents.

The analysis points out that the above data further confirms the view that the U.S. economy is becoming increasingly divided, with some households doing well and others not faring as well.

In the past few months, the rise in U.S. stocks has driven the total net worth of U.S. households to climb, but many Americans do not hold a large amount of stocks. Instead, against the backdrop of rising interest rates in recent years, their debt has continued to increase.

The increased likelihood of debt delinquency reflects the overall deterioration in the financial situation of the surveyed households. Compared to the same period last year, fewer consumers report an improvement in their financial situation, while more report a deterioration.

Nevertheless, respondents' outlook for the next year has improved. More people say they expect their financial situation and access to credit to improve with a strong job market, rising U.S. stock prices, and falling interest rates.

The survey report from the Federal Reserve Bank of New York also shows that the proportion of respondents expecting credit conditions to ease next year has reached the highest level since May 2020.