Inflation Expectations Stabilize, NY Fed Reports

Consumers see inflation averaging 6.0% over next year, 4.0% for next three years

Expectations about future inflation among U.S. consumers remained unchanged in December 2021 from November, the Federal Reserve Bank of New York reports. Meanwhile, uncertainty and disagreement about future inflation decreased. The median expectation among respondents is that inflation will be 6.0% during the next 12 months, declining to an average annual rate of 4.0% across the next three years.

These findings are according to the December 2021 Survey of Consumer Expectations (SCE) conducted by the Center for Microeconomic Data at the Federal Reserve Bank of New York, which was released on Jan. 10, 2022. In addition to inflation, the SCE also includes respondents' views on the labor market and household finance. Key findings in all these areas are summarized below.

Key Takeaways

  • In December 2021, U.S. consumers expected inflation to average 6.0% over the next 12 months and 4.0% over the next three years.
  • This was per a survey conducted by the Federal Reserve Bank of New York.
  • Inflation expectations were unchanged from November 2021.
  • Respondents were more optimistic about their future wage and income growth, as well as their ability to hold a job or find a new one.


As noted above, the median expectation among SCE respondents is that inflation will be 6.0% during the next 12 months, declining to an average annual rate of 4.0% across the next three years. However, median expectations about the increase in home prices over the next 12 months increased to 5.5% from 5.0% in November. This increase was driven by respondents below age 60 and those who live in the south and west census regions.

On the other hand, from November to December 2021, respondents reported lower median expectations about inflation over the next 12 months in several key areas. The anticipated rise in the price of gasoline fell from 9.2% to 5.7%, the rise in food prices from 9.2% to 7.8%, and the increase in the cost of a college education from 9.1% to 8.1%. The anticipated 12-month increases in the costs of medical care and rent remained unchanged, at 9.6% and 10.0%, respectively.

Labor Market

The median expectation of earnings growth over the next 12 months rose from 2.8% in November to 3.0% in December. Greater optimism was most evident among households earning less than $50,000 annually.

Respondents also registered lower expectations that the U.S. unemployment rate will rise, that they will lose a job, or leave their current jobs voluntarily over the next 12 months. Meanwhile, the level of confidence among respondents that they will be able to find a new job if they lose their current job was the highest since the pre-pandemic reading in February 2020. Respondents who were at least 40 years of age and without a college degree were the most optimistic in this regard.

Household Finance

The median expectation about the growth in household income over the next 12 months was 3.4% in December, up from 3.2% in November. This represents a new high for this data series, and the uptick was most pronounced among respondents with no more than a high school diploma.

However, respondents anticipated a slower growth in household spending over the next 12 months. In November, the median expectation was that their spending would rise by 5.7%. This fell to 5.5% in the December survey. The decrease was driven by respondents with annual household incomes below $50,000 and those with no more than a high school diploma.

There was a slight improvement in respondents' perceptions of their current financial situations compared to a year ago. However, as was the case a year ago, more respondents reported that their situations had worsened rather than improved over the preceding 12 months. Looking ahead, though, the number of respondents expecting to be worse off financially a year ahead fell from November to December.

Survey Methodology

The SCE is a nationally representative, internet-based survey of a rotating panel of about 1,300 household heads. Respondents participate for up to 12 months, with a roughly equal number of them rotating in and out of the panel each month. While similar surveys include an entirely different set of respondents each time they are taken, the SCE seeks to capture changes in the expectations and behavior of the same individuals over time.

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  1. Federal Reserve Bank of New York. "Short- and Medium-Term Inflation Expectations Unchanged; Job and Income Expectations Strengthen Further."

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