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The
report offered the latest evidence that consumers expect
inflation to rise in the near term as more Americans return to
work and the U.S. economy heals from the crisis caused by the
coronavirus pandemic.
Fed Chair Jerome Powell said during an interview with CBS News
on Sunday that the U.S. economy is at an "inflection point"
where growth and hiring could pick up speed in the coming
months, thanks to help from vaccines and strong fiscal support.
Some investors and critics are worried that low interest rates
and the large spending proposals from President Joe Biden's
administration could lead to a spike in inflation as the economy
gains traction.
But Powell and other economists say they expect any near-term
inflation pressures to be short-lived and for overall inflation
to remain low.
After five months of steady increases, consumers' short and
medium-term inflation expectations are the highest they have
been in nearly 7 years. Median expectations for how inflation
will change over the next year and the next three years both
increased slightly in March to 3.2% and 3.1%, respectively.
Expectations for how much more consumers expect to spend on
homes, gas, and rent rose to the highest levels since the survey
was launched in 2013.
Consumers surveyed by the New York Fed also raised their outlook
for the labor market. The average expectation that the U.S.
unemployment rate will be higher in one year dropped to 34.4% in
March from 39.1% in February, reaching the lowest point since
the pandemic started.
The survey of consumer expectations is based on a rotating panel
of roughly 1,300 households.
(Reporting by Jonnelle Marte; Editing by Chizu Nomiyama)
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