By Nathalie Voit
A new survey released by the Federal Reserve Bank of New York on July 11 showed U.S. households’ short-term inflation expectations hit a new record high in June.
According to the New York Fed’s June 2022 Survey of Consumer Expectations, median inflation expectations at the one-year horizon rose to 6.8% from 6.6% in May. This was the highest reading since the New York Fed began the series nearly a decade ago in 2013.
Medium and longer-term inflation expectations, however, showed modest declines. Households projected prices to rise at an average rate of 3.6% over the next three years in June, down from 3.9% in May.
Meanwhile, costs are expected to climb by 2.8% over five years in June, a touch below the previous month’s 2.9% reading.
In real estate news, household expectations of how high home prices would accelerate declined dramatically to 4.4% from 5.8% in May. The New York Fed said this was the lowest reading since February 2021 and the second-largest drop in the survey’s series (unmatched only by the rapid drop in real estate prices recorded at the beginning of the COVID-19 pandemic).
In the realm of household finance, respondents reported being worse off this year than in June one year ago. Survey participants were also more pessimistic regarding their future financial situation, with more households expecting their financial situation to deteriorate over the next twelve months.
This thinking was extended to the U.S. stock market, with just over one-third (33.8%) of U.S. adults expecting stock prices to rise one year from now compared to 36.2% in May.