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U.S. inflation outlook declines for the first time since October 2020

US consumers do not expect red-hot inflation levels to continue in the long run. This is a takeaway from data analysis by six co-authors, including Fed President John Williams, who was first listed as a co-author in the Fed’s Liberty Street Economics blog series.
The authors partially quoted a January consumer survey by the Federal Reserve Bank of New York that median inflation expectations one year ahead fell to 5.8% for the first time since October 2020. The three-year outlook declined even more sharply, with widespread declines based on age, education, and income.
Combined with data from the University of Michigan’s Sentiment Index, this shows that consumers appear to be aware of the anomalous nature of current high inflation, economists said in a blog post on Monday.
“This result is from the recent surge in inflation realized as consumers modify their expectations three years ahead, while they are very adaptable to current inflation news as they renew their short-term inflation expectations. It suggests that it is receiving less signal than it was before the pandemic. “They said.
In their analysis, Williams and his five co-authors found that medium-term expectations show that they are less sensitive to inflationary surprises during a pandemic than before. They also found that the five-year inflation outlook has been “very stable” since last summer.
In summary, they write that this suggests that consumers “do not think the current high inflation will last very long.” All products and services surveyed by the New York federal government fell in January, including year-on-year price fluctuations in food, rent, gas, medical, college education and gold. The survey also showed that median households expect a 3% increase in profit growth one year ahead, as they did last month. Last year, an average increase of 2.6% was expected.
Median inflation expectations three years from now fell 0.5 percentage points to 3.5 percent.
Last week, the Ministry of Labor released data showing that consumer prices in January rose 7.5% year-on-year. This is the biggest rise in decades. Sustained high inflation has led central banks to pivot towards monetary tightening to cool prices.
The Fed’s next policy meeting is set for March 15-16, and some economists are calling on central banks to aggressively halve to show their determination to curb price increases. increase.
Inflation is expected to return to a more manageable level, the so-called dire rate, but it will take some time for the combination of inflation and unemployment to diminish. According to a Bloomberg News survey of economists, the dire situation will return to the levels seen between early 2020 and early 2023.



http://www.gulf-times.com/story/709944/US-inflation-outlook-falls-for-first-time-since-Oc U.S. inflation outlook declines for the first time since October 2020

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