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Americans’ inflation expectations plummet to three-year low

The Federal Reserve Bank of New York’s December 2023 Survey of Consumer Expectations showed a marked decline in consumer inflation expectations.

Notably, year-ahead inflation expectations fell to the lowest levels recorded since January 2021.


  • Inflation expectations: The median inflation expectations at the one-year-ahead horizon dipped from 3.4% to 3.0%, the lowest in nearly two years. Over three years, this expectation fell from 3.0% to 2.6%, and over five years, it declined from 2.7% to 2.5%.
  • Earnings and spending growth: Median one-year-ahead expected earnings growth is now at 2.5%, the lowest since April 2021. This is primarily influenced by respondents with a high school diploma or less. Additionally, expectations for earnings growth and spending growth have slightly decreased.
  • Sector-specific price change expectations:
    • College education costs: Increased by 0.5 percentage points to 6.3%.
    • Food costs: Decreased by 0.3 percentage points to 5.0%.
    • Rent costs: Decreased by 0.7 percentage points to 7.3%.
    • Gas and medical care costs: Remained unchanged at 4.5% and 9.1%, respectively.
  • Job market outlook: The mean perceived probability of losing one’s job in the next year has marginally decreased to 13.4%. Concurrently, there’s a slight increase in the probability of voluntarily leaving a job, up to 20.4%, along with a marginal rise from 55.2% to 55.9% in the perceived chances of finding a new job if the current one is lost.
  • Household income and financial situations: The median expected growth in household income slightly decreased to 3.0%. However, this remained above the pre-COVID-19 pandemic level of 2.7%. Notably, perceptions regarding households’ current financial situations have improved, with fewer respondents feeling worse off than a year ago.
  • Interest rates and stock market expectations: The probability of an interest-rate increase in the next 12 months fell to 25.9%, the lowest since November 2021. There was a marginal increase in the expectation of higher stock prices in the next 12 months, to 36.7%.