News from the Financial Associated Press on December 13 (edited by Niu Zhanlin)Consumer survey data released by the New York Federal Reserve on Monday Eastern Time showed that Americans in November expect inflationary pressures to weaken significantly in the next few years, and they believe that food and energy prices will not soar in the coming year like this year.
Respondents expect a record month-on-month decline in inflation a year from now, with inflation expectations falling to 5.2 percent from 5.9 percent in October, the survey showed.
In addition to the improved short-term outlook, the level of inflation expectations three years from 3.1% fell to 3%, and five years from 2.4% to 2.3%. The drop in the path of inflation expectations comes just ahead of this week’s Fed policy meeting.
The survey comes at a time when Fed officials are widely expected to slow down their very aggressive pace of rate hikes at the meeting and are expected to press ahead with rate hikes after their December meeting. The path of inflation expectations is a key variable in this process.
Federal Reserve officials believe that the public’s expectations about the direction of future price pressures have a great influence on the current trend of price pressures.
The recent decline in inflation expectations may be largely related to the sharp drop in gasoline. According to data from the American Automobile Association (AAA), the average price of regular unleaded gasoline in the United States is now around $3.26 a gallon, not only lower than the $3.343 a year ago. The U.S. dollar, meanwhile, is well below its $3.804 level a month ago.
Respondents said they expect gasoline prices to rise 4.7 percent over the coming year, down from a 5.3 percent forecast in October, and food prices to rise 8.3 percent. But they also expect wages to rise 2.8 percent over the coming year, with Fed officials concerned that rising wage pressures could worsen inflation, keeping terminal interest rates higher than market expectations next year.
Federal Reserve Chairman Jerome Powell recently said that we believe wage increases may be a very important part of future inflation trends, and to make wage growth sustainable, it needs to be consistent with the 2% inflation target.
The job outlook actually improved, with 42.2% of respondents saying they thought the unemployment rate would be higher a year from now. In the previous month, about 42.9% of respondents expected the unemployment rate to rise. The current unemployment rate in the United States is 3.7%.
In addition, workers’ expectations of being able to find a job if they lost their current job rose to 58.2%, the highest level since February 2020, when the pandemic hit full blow.