Federal Reserve: Short-term inflation expectations of American consumers have declined for two consecutive months, and expectations for housing price increases have cooled

On Monday, the latest survey results from the Federal Reserve Bank of New York in the United States showed that in June, American consumers' expectations for short-term inflation in the country have declined for two consecutive months, falling back to the level at the beginning of the year. This is because people have reduced their expectations for the rise in housing prices and other commodity costs in the coming year.

Specifically, the one-year inflation expectation in the United States for June has dropped to 3.02%, down from 3.17% in May. This change indicates that consumers' short-term inflation expectations have returned to the level from December last year until April this year. In April, people's short-term inflation expectations briefly surged to 3.3%, reaching the highest point of the year.

The mid-term three-year inflation expectation has slightly increased to 2.9%, the highest since November last year, up from 2.8% in May. The longer-term five-year inflation expectation has decreased to 2.8%, down from 3% in May, when it hit a one-year high.

The above latest survey from the Federal Reserve Bank of New York is consistent with a series of recent data showing a cooling trend in inflation. Several inflation data at the beginning of the year briefly rebounded, highlighting that inflation in the United States is more stubborn than expected.

This Thursday, the U.S. Bureau of Labor Statistics will release the CPI inflation data for June. The market expects this heavyweight inflation indicator to further move towards the Federal Reserve's target. Wall Street expects that in June, the year-on-year increase in core CPI (excluding volatile food and energy) is expected to remain at 3.4% as in May; the month-on-month increase for the second consecutive month is expected to be 0.2%, potentially marking the smallest two-month increase since August last year. The overall CPI year-on-year increase is expected to decrease from 3.3% in May to 3.1%, the lowest in five months; the month-on-month increase is expected to rise slightly from 0% to 0.1%.

The survey by the New York Fed also shows that consumers' expectations for the magnitude of housing price increases in the next year have decreased from 3.3% in May to 3% in June, returning to the average level over the past 12 months.

In the survey, the median expectations for the price changes of all goods in the next year have decreased, indicating that the expected rate of price increases will slow down. This includes gasoline, food, medical care, and rent:

Gasoline decreased by 0.5 points to 4.3%, food decreased by 0.5 points to 4.8%, medical costs decreased by 1.7 points to 7.4%, rent decreased by 2.6 points to 6.5%, and college education costs decreased by 3.1 points to 5.3%.

In terms of the labor market, in June, people's average expectations for the probability of the U.S. unemployment rate rising one year from now compared to the current level decreased by 1 percentage point to 37.6%, slightly below the average over the past 12 months Family Finance:

In June, the median expected growth rate of surveyed household income decreased by 0.1 percentage point to 3.0%. Since January last year, this figure has been fluctuating within a narrow range of 2.9% to 3.3%, still higher than the pre-COVID-19 level of 2.7% in February 2020.

The median expected growth in household spending increased by 0.1 percentage point to 5.1%. Since August 2023, this figure has remained stable between 5.0% and 5.3%, significantly higher than the pre-COVID-19 level of 3.1% in February 2020.

The median expectation for corporate profit growth in the next year has risen to 3.0%, the highest since September 2023. The average expected probability of the U.S. stock market rising in 12 months has decreased by 1.3 percentage points to 39.2%