Median expectations for what inflation will look like over the
next year rose for the seventh consecutive month to 4% in May.
That is up from 3.4% in April and reaches a new high for the
series, which launched in 2013. Expectations for inflation over
the next three years increased more modestly to 3.6% from 3.1%.
Consumers also shared a much brighter outlook for the labor
market at a time when more businesses are opening up, travel is
increasing and hiring is improving.
The average expectation that the U.S. unemployment rate will be
higher one year from now dropped to a series low of 31.9% in
May, down from 34.6% in April.
The perceived odds of losing a job over the next year also
reached a new low, falling to an average of 12.6% in May from
15% in April. The shift was most pronounced among workers below
the age of 40, those earning less than $50,000 in household
income and people with no more than a high school degree.
Workers also said they felt they had better odds of finding a
job if they became unemployed, with the expected odds rising to
54% in May from 49.8% in April - the largest monthly increase
for the series. Those expectations were the highest they've been
since February 2020, but were still below pre-pandemic levels.
Fed officials said they will soon begin discussing plans for
pulling back the support they are offering to the U.S. economy
through $120 billion in monthly bond purchases and low interest
rates. Some economists expect the conversation could start
during the policy meeting happening this week on Tuesday and
Wednesday.
(Reporting by Jonnelle Marte; Editing by Andrea Ricci)
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