Economy
U.S. consumers show cautious optimism amid stable inflation expectations
The latest data from the Federal Reserve Bank of New York and the University of Michigan reveal a nuanced picture of US consumer sentiment. Despite a dip in consumer sentiment last Friday due to inflation concerns, the October Survey of Consumer Expectations, released today, suggests a more stable outlook with steady inflation rates and a resilient labor market, potentially easing the pace of future interest rate hikes by the Federal Open Market Committee (FOMC).
The Federal Reserve Bank of New York’s survey highlighted that one-year inflation expectations have declined to 3.6%, while expectations for five years out also decreased to 2.7%. The three-year median expectation remained unchanged at 3%, indicating a steady view of inflation over a longer-term horizon. This could signal to Fed officials that fewer aggressive rate hikes may be necessary, although Fed Chair Jerome Powell has indicated that increases could still occur if needed.
The survey also pointed out some concerns among consumers, with job security fears showing a slight uptick. The probability of job loss rose to 12.7%, while the job-finding probability registered at 56.6%. Despite this, income expectations were reported at 3.1%, which is above pre-pandemic levels, suggesting that consumers feel relatively positive about their earning potential.
Household spending growth expectations remained constant at 5.3%, reflecting enduring higher spending compared to before the pandemic hit. Additionally, the likelihood of missing a debt payment within the next three months fell to 12%, aligning with pre-Covid-19 norms and indicating improved credit conditions over the past year.
In contrast, last Friday’s University of Michigan Consumer Sentiment Index showed a drop in consumer sentiment due to inflation fears, underscoring Fed officials’ concerns about potentially worsening expectations and rising long-term inflation projections. However, wage growth expectations experienced only a marginal decline to 2.83%.
Despite some mixed feelings about financial prospects for the coming year, more respondents felt they were financially better off than last year. This sentiment was supported by spending expectations holding at 5.25%, significantly higher than pre-pandemic levels of 3.1%.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo
SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.
With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.
The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.
China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.
The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.
“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.
The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.
($1 = 7.1315 renminbi)
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
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