MNI BRIEF: May Consumers Inflation Expectations Fall - NY Fed

Consumers' inflation expectations receded in May, and uncertainty over inflation outcomes a year ahead also declined in a month in which the U.S. and China agreed to a temporary truce on tariffs, according to the New York Fed Survey of Consumer Expectations published Monday. 

Median one-year-ahead inflation expectations fell 0.4 pp to 3.2%; three-year-ahead expectations declined 0.2 pp to 3.0%; and five-year-ahead inflation expectations dipped 0.1 pp to 2.6%. The declines at the one- and three-year horizons were broad-based across age, education and income groups, the Fed bank said. Median uncertainty over inflation expectations was unchanged at the three- and five-year horizons, according to the survey.

Consumers’ pessimism about the labor market also "eased somewhat," the survey said. Mean expectations that the U.S. unemployment rate will be higher one year from now dropped 3.3 pp to 40.8%, but remains well above the 12-month average of 37.7%, the Fed bank said. (See: MNI INTERVIEW: Inflation Expectations Troubling-Gorodnichenko)