Fed Survey: US 3-year inflation expectations hit a new low, household spending expectations weak, unexpected improvement in unemployment expectations

On Monday, August 12th, according to the consumer survey report released by the New York Fed, the one-year and five-year inflation expectations for American consumers in July remained stable, while the three-year inflation expectation saw a significant drop, hitting a record low of 2.3%. Specifically: The one-year inflation expectation in July was 2.97%, down from 3.02%. The three-year inflation expectation in July plummeted to 2.33%, marking the smallest increase expectation since June 2013, when data was first recorded, down from 2.93%. The decline in the three-year inflation expectation was most pronounced among respondents with a high school education or below and those with annual household incomes below $50,000. The five-year inflation expectation in July was 2.81%, down from 2.83%. Looking at specific categories: Consumers in July expected gasoline prices to rise by 3.46% in the coming year, a decrease of 0.8 percentage points. Food prices were expected to rise by 4.67%, a decrease of 0.1 percentage points. Medical costs were expected to rise by 7.61%, an increase of 0.2 percentage points. College education costs were expected to rise by 7.15%, an increase of 1.9 percentage points. Rent prices were expected to rise by 7.14%, an increase of 0.6 percentage points; the median home price growth expectation remained unchanged at 3%. In terms of labor market data for July: The median expected income growth for the coming year decreased by 0.3 percentage points to 2.7%. The average probability of a higher U.S. unemployment rate in the coming year decreased by 1 percentage point to 36.6%, still below its 12-month average of 37.7%. The average perceived probability of losing a job in the next 12 months decreased by 0.5 percentage points to 14.3%. The average perceived probability of finding a job after losing the current one decreased by 0.9 percentage points to 52.5%. The average probability of voluntary resignation in the next 12 months increased by 0.2 percentage points to 20.7%, the highest reading since February 2023. Analysts noted that there has been a certain decline in people's optimism about income. Surprisingly, expectations regarding unemployment have improved. Earlier in August, the U.S. non-farm data was poor, with an increase in the unemployment rate triggering recession warning signals under the Sam rule, but the latest survey results are inconsistent with the weak non-farm data. The expected increase in household spending in July was 4.9%, lower than the previous 4.7%, marking the smallest increase expectation since April 2021. Compared to a year ago, credit access deteriorated in July, with the report stating that the proportion of households finding it harder to obtain credit compared to a year ago has increased. 13.29% of consumers expect to be unable to repay their minimum debt in the next three months, up from 12.26% in June, showing a significant increase in the past month, reaching the highest level since April 2020. On the same day, according to the New York Fed's second-quarter household debt and credit report, over 10% of credit card debt is overdue by more than 90 days. The Consumer Financial Protection Bureau report stated that due to lenders taking on more risk, credit card delinquency rates have exceeded those of 2019. Delinquency rates for credit cards and auto loans in the United States surged in the second quarter, with consumers who are behind on payments showing clear signs of economic hardship, indicating a weakening of consumer spending or a "nail in the coffin." This week, the United States will release key inflation data, with the Producer Price Index (PPI) on Tuesday and the Consumer Price Index (CPI) on Wednesday. The above-mentioned New York Fed consumer survey on Monday is also receiving significant attention as a result. Prior to understanding the forthcoming hard data, consumer expectations regarding inflation and the labor market are also widely observed by the market and decision-makers