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U.S. consumers expect to spend more on rent and other bills, NY Fed survey finds

EconomyMar 08, 2021 11:10AM ET
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© Reuters. Philadelphia market feels the toll of pandemic uncertainty

(Reuters) - U.S. consumers said they expect to spend substantially more on rent, gas and other essentials over the next year, a sign some people are expecting key costs to rise as the economy continues to heal from the crisis caused by the coronavirus pandemic, according to a survey released Monday by the Federal Reserve Bank of New York.

Consumers said they expect gas prices to rise by a median 9.6% over the next year, up from 6.2% in January. It was the fifth straight month of increase and a new high for the survey, which launched in 2013. Similarly, rent is expected to increase by a median of 9.0% over the next year, up from 6.4% in January.

Respondents also raised their expectations for how much food, medical care and college will cost over the next year.

A drop in coronavirus infections, the distribution of vaccines and expectations for additional fiscal support is raising hopes that the U.S. economy could be poised for a robust recovery this year. Investors expecting stronger inflation are moving into riskier assets, leading to a rise in long-term Treasury yields.

Some investors worried about inflation have speculated the Fed would move to lower long-term borrowing costs by adjusting its bond-buying program. But Fed officials signaled last week that they view the rise in long-term yields as a sign of growing optimism about the economy and do not expect to adjust monetary support in the near future. Fed officials will meet again for a policy-setting meeting on March 16 and 17.

The New York Fed's survey is based on a rotating panel of about 1,300 households.

Median inflation expectations over the next year rose slightly to 3.1% in February, reaching the highest level since July 2014. Projections for inflation at the three-year horizon stayed flat at 3.0%, according to the monthly Survey of Consumer Expectations.

U.S. consumers expect to spend more on rent and other bills, NY Fed survey finds
 

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Comments (4)
Terence Williams
Terence Williams Mar 08, 2021 12:53PM ET
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An economy more dependent on Government largesse seems doomed to decline. Increasing regulations, taxes ,and blanket hand outs are not the marks of prosperity. In a competitive world, substandard education as in place in the US, makes long term prospects dimmer yet. Bond rates are a harbinger of the problems coming.. so much for optimism.
Roger Miller
Roger Miller Mar 08, 2021 11:51AM ET
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Free money comes at a price!
Allatra Yiveh
AllatraYiveh Mar 08, 2021 11:31AM ET
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Yeah, but the CPI or CPLie is just barely below 0.3%. See how fake the official data is? The FED and government are trying to hide the inflation.
Clinton Powell
Clinton Powell Mar 08, 2021 11:17AM ET
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Gasoline at the pump is going to rocket back to Obama years prices
 
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