- Consumers anticipating higher inflation in both near term and over course of several years
- Inflation expectations one year from now hit 4% in May 2021
Inflation Expectations for One Year from Now Hit High of 4%
Consumers are totally dialed in to Â higher inflation expectations.
According to a newly released study from the Federal Reserve Bank of New York, consumers are expecting higher inflation in the near-term and over the course of several years to jump.Â In May, short-term (one year from now) consumer expectations jumped +0.6% to 4%.
Longer term (over the next three years), consumer inflation expectations are anticipating gains of +3.6%, up from 3.1% in April
This 3.6% inflationary gain would put inflation levels consistent those seen in 2013
Higher Inflation Expectations Consistent with More Confidence in Job Market
According to this Federal Bank of New YorkÂ survey, jobholders expect that the probability of their losing their jobs within this next year hit the lowest on record.Â Simultaneously, the probability of finding a job increased substantially.
Job openings continue climbing though hirings are slower than anticipated.Â Demand for someÂ consumer goods is surging and supply is hustling to meet that demand.
The bottom lineâ€¦inflation is rising.
Federal Reserve Officials Cautiously Signaling Expectations to Raise Interest Rates
Because the Fedâ€™s March projections of higher inflation and growth rates have been outdone by the latest increases in consumer prices, +5% in May, and employers are raising wages to hold on to their â€œtalent,â€ officials with the Federal Reserve Bank are on their way toÂ refining their thinking about interest rates.
Barclays Bank PLCÂ now anticipates that annual inflation will hit 3.6% in Q4 2021.Â This anticipation of 3.6% is nearly double the Fedâ€™s target inflation rate of 2%.
JPMorgan ChaseÂ chief US economist Michael Feroli is expecting a median interest rate increase in 2023.Â Feroli said, â€œWe are also bringing forward our expectations for liftoff to late 2023.â€
Fed governor Lael Brainard said, â€œShould inflation move materially and persistently above 2%, we have the tools and experience to gently guide inflation back down to target.Â And no one should doubt our commitment to do so.â€
Thanks to The Wall Street Journal and The New York Times.
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