Federal Reserve: Long-term inflation expectations among US consumers rise, expectations for debt delinquencies reach highest level since the pandemic began

On Tuesday, according to the latest consumer survey data from the New York Fed, the three-year inflation expectations for September rose to 2.7%, up from 2.5% in August; the five-year inflation expectations rose to 2.9%, up from 2.8% in August; however, the short-term inflation expectations for one year remained stable at 3%. The increase in inflation expectations for the three-year and five-year periods is most pronounced among respondents with a high school education as their highest degree. However, overall, people's inflation expectations remain relatively stable. In September, consumer inflation expectations by category are as follows: Respondents expect gasoline prices to rise by 3.4% in the next 12 months, the lowest increase in two years, down 0.2 percentage points from August. Food inflation is expected to be 4.5%, up 0.1 percentage point from August, when inflation expectations for this category dropped to the lowest level before the COVID-19 pandemic. Expectations for rent inflation decreased by 1 percentage point to 6.3%. Expectations for the median house price growth decreased by 0.1 percentage point to 3%. Since August 2023, this reading has been fluctuating narrowly between 3.0% and 3.3%. University fees are expected to rise by 5.9%, with the forecasted increase unchanged from August. Expectations for medical expenses decreased by 1.4 percentage points to 6.6%, the lowest reading since February 2020. Regarding the labor market survey in September: The median expected income growth for the next year decreased by 0.1 percentage point to 2.8%. The current reading is consistent with the average of the past 12 months. The average unemployment expectation, the average probability of the U.S. unemployment rate rising in the next year, decreased by 1.5 percentage points to 36.2%. This decrease is widespread across education levels and household income groups. The average perceived probability of losing a job in the next 12 months remained unchanged at 13.3%. The average probability of voluntarily quitting in the next 12 months increased from 19.1% to 20.4%, with the most significant growth among respondents under 40 years old. The average perceived probability of finding a new job if the current job is lost increased from 52.3% in August to 52.7% in September. This data is still below the average level of 53.6% over the past 12 months. In September, American households' expectations of possibly falling behind on debt payments rose to the highest level since April 2020, during the difficult early days of the COVID-19 pandemic. Specifically, the probability of being unable to repay the minimum debt in the next three months rose to 14.2%, marking the fourth consecutive month of increase from 13.6% in August. The increase in debt delinquency expectations is mainly driven by middle-aged respondents. Analysis indicates that the above data further confirms the view that the U.S. economy is becoming increasingly divided, with some households performing well while others are not. In recent months, the rise in U.S. stocks has driven up the total net worth of American households, but many Americans do not hold a large amount of stocks. Instead, against the backdrop of rising interest rates in recent years, their debt has been increasing continuously The rising probability of debt default reflects a deteriorating overall perception of the current financial situation among surveyed households. Compared to the same period last year, fewer consumers are reporting an improvement in their financial situation, while more are reporting a deterioration. Nevertheless, respondents have a more positive outlook for the next year. More people are indicating that they expect their financial situation and access to credit to improve as the job market strengthens, the U.S. stock market rises, and interest rates fall. The survey report from the New York Fed also indicates that the proportion of respondents expecting credit conditions to loosen next year has reached the highest level since May 2020