Inflation expectations among consumers hit new highs

Inflation expectations among consumers hit new highs
A Fed survey shows U.S. household expectations for inflation one year ahead rose to 5.3% in September from 5.2% in August, while median expected inflation three years ahead rose to 4.2% from 4%.
OCT 12, 2021
By  Bloomberg

Consumers’ expectations for inflation continued to rise in September amid elevated price pressures, according to a Federal Reserve Bank of New York survey.

U.S. household expectations for inflation one year ahead rose to 5.3% last month from 5.2% in August, while median expected inflation three years ahead rose to 4.2% from 4%, results of the New York Fed’s monthly Survey of Consumer Expectations, published Tuesday, showed. Both marked the highest readings on record in the survey’s eight-year history.

Inflation, as measured by the Fed’s preferred gauge, was 4.3% in the 12 months through August, well above the central bank’s 2% target.

Fed officials including Chair Jerome Powell have chalked up the elevated inflation rates to supply chain bottlenecks and other transitory pressures tied to the reopening of the economy as the coronavirus pandemic recedes, and have said they expect inflation to drift back down to about 2% by the end of next year.

Still, central bankers keep a close eye on inflation expectations because they believe such expectations to be a key determinant of the course of actual inflation in the future.

Deutsche Bank economists said Tuesday they now expect the Fed to begin raising interest rates from their current near-zero levels in December 2022 — earlier than previously anticipated — in large part as a result of the rise in various measures of inflation expectations.

The New York Fed noted in Tuesday’s press release that “longer-term (5-year ahead) inflation expectations still appear to be as well anchored as they were two years ago, before the start of the pandemic,” pointing to a recent blog post on the bank’s website containing additional data from the survey.

Latest News

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

Apella Wealth comes to Washington with Independence Wealth Advisors
Apella Wealth comes to Washington with Independence Wealth Advisors

The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.

Citi's Sieg sees rich clients pivoting from US to UK
Citi's Sieg sees rich clients pivoting from US to UK

The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.

US employment report reactions: Overall better than expected, but concerns with underlying data
US employment report reactions: Overall better than expected, but concerns with underlying data

Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.

Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading
Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading

"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.