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Board of Governors of the Federal Reserve System (US)
Finance and Economics Discussion Series
Perceptions and Expectations of Inflation by U.S. Households
Sandor Axelrod
David E. Lebow
Ekaterina V. Peneva
Abstract

To better understand inflation expectations, we examine newly available data on U.S. households' inflation perceptions-what people think inflation has been in the past. The overarching summary is that inflation perceptions look similar to inflation expectations. The central tendencies of the responses for perceived inflation over the past five to ten years are similar to those of expected inflation for the next five to ten years, and all are a little above official estimates of inflation. Thus, survey respondents overall do not expect long-term inflation to change in the future relative to the recent past. Moreover, individuals who perceive higher inflation in the past tend to expect higher inflation in the future; people whose perceptions change tend to revise their expectations in the same direction; and perceptions and expectations vary similarly by gender and income. These results suggest that if inflation perceptions were to change, they could lead inflation e xpectations to change as well.


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Sandor Axelrod & David E. Lebow & Ekaterina V. Peneva, Perceptions and Expectations of Inflation by U.S. Households, Board of Governors of the Federal Reserve System (US), Finance and Economics Discussion Series 2018-073, 25 Oct 2018.
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Keywords: Consumer surveys ; Inflation dynamics ; Inflation expectations ; Inflation perceptions
DOI: 10.17016/FEDS.2018.073
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