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US’ short-term inflation expectations dip in Feb 2023: New York Fed

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US’ inflation expectations in February 2023 decreased sharply in the short-term horizon, but remained unchanged at the medium-term horizon and slightly increased at the long-term horizon, according to the latest survey from the Federal Reserve Bank of New York’s Center for Microeconomic Data. Labour market expectations improved, with unemployment expectations and perceived job loss risk decreasing and job finding expectations increasing.

Median inflation expectations dropped by 0.8 percentage point at the one-year-ahead horizon to 4.2 per cent, remained unchanged at the three-year-ahead horizon at 2.7 per cent, and increased by 0.1 percentage point at the five-year-ahead horizon to 2.6 per cent. The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) declined at all three horizons.

US’s inflation expectations dropped sharply in the short-term horizon but remained unchanged at the medium-term horizon, as per a latest survey. Labour market expectations improved, with unemployment and job loss risks declining and job finding expectations increasing. Median one-year-ahead expected earnings growth remained unchanged at 3 per cent.

Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—declined at the one- and three-year ahead horizons and remained unchanged at the five-year-ahead horizon, as per Federal Reserve Bank of New York’s ‘Survey of Consumer Expectations’.

Median one-year-ahead expected earnings growth remained unchanged at 3 per cent in February. The series has been moving between a narrow range of 2.8 per cent to 3 per cent since September 2021.

Mean unemployment expectations—or the mean probability that the US unemployment rate will be higher one year from now—declined by 1.8 percentage point to 39.4 per cent.

The mean perceived probability of losing one’s job in the next 12 months decreased by 0.2 percentage point to 11.8 per cent. The mean probability of leaving one’s job voluntarily in the next 12 months increased by 1.7 percentage point to 20.8 per cent, the highest reading of the series since February 2020, the survey added.

The mean perceived probability of finding a job (if one’s current job was lost) increased by 0.3 percentage point to 57.9 per cent in February.

Fibre2Fashion News Desk (DP)


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