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The President spoke of optimism for America’s future in his final State of the Union Address on Tuesday night. A recent survey from the Federal Reserve Bank of New York found that he may not have much company as far as that optimism, however.
Consumers appear to be less optimistic about their future with regard to the economy, the job market, and personal finances, according to the New York Fed [2]’s December 2015 Survey of Consumer Expectations (SCE) [3]. The metric that took a big hit was median one-year earnings growth expectations, which dropped from November’s 2.5 percent to 2.0 percent in December, which was the level it hovered around for the second half of 2015. This was the largest drop for this metric since the SCE’s inception in June 2013.
“The decline was widespread across all age groups, and especially strong for low education and middle-income workers,” the SCE stated.
That was far from the only data point in which consumer optimism declined, however. One-year ahead median household income growth expectations continued a declining trend, this time from 2.6 down to 2.3 percent—seemingly driven by younger, higher education, and higher income respondents, according to the New York Fed. That percentage fell in the 2.7 to 2.9 range for the first three quarters of 2015.
The median home price change fell to 3.0 percent in December, driven by older and lower income respondents. This level matched the previous all-time low for median home price change, reached twice in February and August of 2015. Inflation uncertainty (uncertainty regarding future inflation outcomes) reached new series lows at both the one-year and three-year ahead horizons (2.40 and 2.54 percent, respectively) in December, and median inflation expectations remained flat at a series low for the one-year ahead horizon at 2.5 percent.
[4]Also according to the SCE, one-year ahead median household spending growth expectations took a sharp decline from 3.6 percent down to 2.9 percent down to its lowest level since the survey began two and a half years ago. Unlike the decline in income growth expectations, however, the decline in household spending expectations was driven by older, lower education, and lower income respondents, the SCE reported.
While the mean probability of losing a job declined from 14.1 percent to 13.5 percent, the second lowest level since the beginning of the survey, the mean probability of finding a job in the next three months if a job loss were to occur also dropped fell from its series high of 55.1 percent in November, according to the SCE. At the same time, the mean perceived probability of voluntarily leaving a job dropped slightly in December and is near an all-time low.