A large number of reports on how the New York Fed’s survey of consumer inflation expectations has changed significantly (e.g. right now). Several observations: (1) Household/consumer expectations are upward biased; (2) High inflation expectations are temporary, that is, the expected inflation in the next 12 months is higher than the 12-month inflation ending in June 2024 .
figure 1: Actual CPI year-on-year inflation (black bold), median inflation (blue line), and interquartile range (blue area). Source: U.S. Bureau of Labor Statistics, Federal Reserve Bank of New York, And the author’s calculations.
In the past few months, the deviation of forecasts has increased. During the existence of the survey (as shown above), the median forecast was higher than the ex post facto realization. The long-term household surveys conducted in Michigan also have this feature (see this article).
The inflation rate for the third year from now is expected to be lower than in the next 12 months.
figure 2: The median expected inflation for the next year (blue), the year ending June 2024 (brown), and the average expected inflation for the 12 months ending June 2022 (pink squares). Source: U.S. Bureau of Labor Statistics, Federal Reserve Bank of New York, Wall Street Journal investigation in July.
Please note that the professional economists surveyed Wall Street Journal In early July, the inflation rate is expected to be significantly lower than that of consumers.
