Americans have mixed views on the overall economy in relation to the upcoming presidential election, but when it comes to their own finances, they are feeling optimistic. According to survey data released by the Federal Reserve Bank of New York, US consumers are feeling more positive about their current and future financial situation, as well as the stock market and inflation. The May Survey of Consumer Expectations showed improvements in perceptions of current financial situations and outlooks for the future, with high levels of positivity reported in both areas.
The survey also indicated that consumers are optimistic about the stock market, with households expecting the highest US stock prices in three years. However, the outlook for the labor market was more mixed, with expectations for earnings growth slightly lower and concerns about the national unemployment rate rising above the 12-month trailing average. Despite this, consumers’ perceived probability of job loss decreased, suggesting a level of confidence in job security.
While the May survey painted a positive picture overall, the previous month’s survey had shown concerns about rising home prices and inflation expectations reaching a five-month high. However, in May, home price expectations remained high while inflation expectations decreased, which is a positive sign for the Federal Reserve. The Fed closely monitors inflation expectations as they can impact consumer behavior, wages, and business decisions. The survey showed that three- and five-year inflation expectations remained unchanged.
A critical read on inflation will come with the release of the May Consumer Price Index, expected to show a slowdown in consumer prices on a monthly basis and a cooling of key underlying inflation metrics. This news would be welcomed by Americans who have been dealing with elevated inflation for over three years, as well as the Fed in its efforts to control price increases and the markets. In April, when the CPI indicated a cooling of inflation, major US stock indexes reached record highs, suggesting that investors are sensitive to inflation data.
Overall, Americans seem to have a positive outlook on their own finances and the overall economic situation, despite concerns about the upcoming presidential election. The survey data from the Federal Reserve Bank of New York shows that consumers are optimistic about the stock market and inflation, while perceptions of current and future financial situations remain high. While there are some mixed views on the labor market, the overall sentiment is one of confidence. As the US awaits the release of the May Consumer Price Index, expectations are high for a slowdown in inflation, which would be welcome news for consumers, the Fed, and the markets.
