The Federal Reserve Bank of New York’s survey of consumer expectations shows the median three-year ahead expected inflation rate decreased 24 basis points from August to 2.74% in September.
 
This corroborates the previously released University of Michigan September survey of consumers that saw the five-year ahead expected inflation rate decrease by 10 basis points (to 2.60%) and the one-year ahead by 40 basis points (to 2.70%).  
 
Both surveys are up from the covid-shutdown lows and both are down from the reopening highs.  More importantly, they are both down from August which was no ordinary month.  At the end of August, to much fanfare and publicity, the Federal Reserve announced that it would let inflation ‘run pure’, that “appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.”  
 
Did consumers not get the message?  Are they too stupid?  Or don’t they believe?

 

FRBNY Survey Sees Falling Expectations
FRBNY Survey Sees Falling Expectations

 

University of Michigan Survey Sees Falling Expectations
University of Michigan Survey Sees Falling Expectations