New York Fed Says Consumers Were More Optimistic About Economy in May
According to the Federal Reserve Bank of New York’s Survey of Consumer Expectations for May 2020, Americans grew more optimistic about the state of the economy compared to April. However, expectations still remain lower than pre-COVID-19 levels.
“Consumers grew comparatively more optimistic about labor market outcomes with earnings growth, job finding, and job loss expectations all slightly improving,” the New York Fed said, according to a Wall Street Journal article highlighting the report.
Though unemployment rates were at an all-time high in May, the survey data showed unexpected growth in payrolls as many parts of the nation began reopening businesses after the months-long pandemic shutdown. The group also found a “significant decline” in expectations of losing a job, and expectations that the unemployment rate will be higher in a year. Meanwhile, expectations of finding new work increased.
Consumers still viewed their personal finances negatively, but the survey data showed some improvements. The average expectation of household income growth rose from 1.9 percent in April to 2.1 percent in May, ending a 3-month decline.
“On the other hand, perceived and expected availability of credit continued to worsen,” the New York Federal Reserve said. “Median inflation expectations increased at the one-year horizon and remained stable at the three-year horizon.”
Projections of year-out inflation levels rose from 2.6 percent in April to 3 percent in May, though expected inflation in three years remained at a steady 2.6 percent. The survey noted that consumers are bracing for sudden gains in energy and food costs.
The inflation data could cause some concern, as Fed officials were confident that inflation pressures would remain low. The increase in inflation expectations could signal stronger price pressures than expected.