US Consumers See Inflation Falling

US Consumers See Inflation Falling

US consumers’ inflation expectations deteriorated to their weakest levels since late Y 2017 in May, while their views on jobs and family finances grew less certain, according to a Federal Reserve Bank of New York survey published Monday.

The weakening in inflation expectations may factor into Fed policymakers’ decision whether to lower interest rates in the coming months to help boost US price growth towards the central bank’s 2% goal.

One of the justifications for the Fed to cut rates this year will be the surprisingly weak inflation.

The survey of consumer expectations, which the Fed considers along with other data on US price pressures, showed consumers’ 1-year inflation outlook dropping 0.1 percentage point to 2.5% last month.

The survey’s 3-year inflation measure also fell by 0.1 point to 2.6%.

The drop in consumers’ inflation outlook followed a disappointing US payrolls report Friday, which showed a sharp slowdown in domestic job growth in May. Analysts said businesses worried that trade tensions between the United States and its trading partners were scaling back hiring.

The New York Fed survey is done by a 3rd party that taps a rotating panel of about 1,300 household heads.

The latest New York Fed survey showed some uncertainty creeping into consumer sentiment on labor conditions and household finances, even as expectations for wage gains improved a bit to 2.5% last month.

The New York Fed’s gauge on consumers’ view of unemployment rising a year from now increased by 1 point to 36.7%, but a barometer on confidence to find a job increased to 61.5% in May, the highest since the series began in June 2013, from 59.3% in April.

Median expectations on household income growth dipped to 2.8% from 2.9% in April.

Monday, US interest rates futures implied traders expect the Fed to lower its benchmark overnight lending rate by at least 50 bpts by the end of the year, according to CME Group’s FedWatch program.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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