Every month the New York Fed conducts a Survey of Consumer Spending Expectations covering three broad categories: inflation, labor market and household finance.

The SCE contains monthly insight about how consumers expect overall inflation and prices for food, gas, housing, education and medical care to change over time. It also provides Americans’ views about job prospects and earnings growth, as well as their expectations about future spending and access to credit. Finally, the SCE  provides measures of uncertainty in expectations for the main outcomes of interest.

Expectations are available by age, income, education, numeracy and geography.

Let’s take a look at some of the details, plus a chart that I created from their Excel spreadsheet.

Inflation, Labor Market, Finance

SCE 2016-06

Inflation expectations are complete nonsense. The labor market view is likely backward looking. Respondents expect raises of about two percent despite the fact that wage growth has been averaging more than that.

The Fed left off what I believe is the most important data series: Spending expectations.

One Year Ahead Household Spending Expectations

Spending Projections 2016-06

Instead of believing its own survey that shows spending assumptions are headed down, the Fed has faith in all sorts of consumer confidence numbers that I believe are mostly garbage.

May Readings

  • High 8.14
  • Median 3.5
  • Low 0.38

The trendline projections do not portend high “confidence” if one wants to use that particular word.

The low-end is particularly telling. It suggests those consumers are deep in debt, wanting to pay down credit, not spend more.

Mike “Mish” Shedlock.