A January study from the Federal Reserve Bank of New York found consumers expect to be spending more this year than they have in several years past, according to a press release.
Consumers’ expectations rose to 4.2 percent, the highest in five years, the release stated. Earnings growth expectations were a contrast, though, staying flat at 2 percent for the sixth month in a row.
The labor market’s expectations remained high, with people optimistic about things like job security and the ability to find a job, according to the release. However, the expectation that the unemployment rate would be higher in a year increased from 38.9 percent in December to 40.2 percent in January.
Home pricing expectations were up to 4 percent, the best numbers since May 2014, the release stated.
Median inflation expectations were fairly flat, the release stated, sitting at 3 percent in January, and the median inflation uncertainty was as high as it has been throughout the pandemic. There was also an expectation of increase for the changes in prices of commodities, with people expecting the cost of gas and the cost of rent to go up in the next year, with rent in particular seeing the highest expectation number in seven years.
In addition, the median expectation for change in food, medical care and a college education have also increased, the release stated.
In related news, National Retail Federation Chief Economist Jack Kleinhenz said the massive boost in holiday sales in November and December had come mostly from consumers relieving stress after a tumultuous year, in addition to showing that the economy is rebounding from the lower points earlier in the pandemic.
He said the fear of more COVID-19 infections tempered spending a little, but consumers had largely been buoyed by saving their money and not being able to spend it on things like entertainment or travel anymore.
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