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Journal Article
An overview of the Survey of Consumer Expectations
The authors present an overview of the New York Fed?s Survey of Consumer Expectations, a monthly online survey of a rotating panel of household heads. The survey collects timely information on respondents? expectations and decisions on a broad variety of topics, including inflation, household finance, the labor market, and the housing market. It has three main goals: (1) measuring consumer expectations at a high frequency, (2) understanding how these expectations are formed, and (3) investigating the link between expectations and behavior. The authors discuss the origins of the survey, the ...
Journal Article
Understanding the Evolution of Student Loan Balances and Repayment Behavior: Do Institution Type and Degree Matter?
Student loan balances and delinquency rates have soared to unprecedented levels in recent years, forming what many commentators have termed a “student loan bubble” and creating a major public policy issue. Given the importance of student loans for human capital formation and economic growth, understanding student loans and repayment behavior is essential from a policy perspective. Yet research in this area has been limited. The authors seek to fill the gap by examining student loan performance over time by institution type and degree program. Using detailed data collected as part of ...
Discussion Paper
What Is Driving the Recent Rise in Consumer Inflation Expectations?
The Thomson Reuters/University of Michigan Survey of Consumers (the “Michigan Survey” hereafter) is the main source of information regarding consumers’ expectations of future inflation in the United States. The most recent release of the Michigan Survey on March 25 drew considerable attention because it showed a large spike in year-ahead expectations for inflation: as shown in the chart below, the median rose from 3.4 to 4.6 percent and the other quartiles of responses showed similar increases. What may have caused this rise in inflation expectations and what lessons should be taken ...
Discussion Paper
Inflation Expectations and Behavior: Do Survey Respondents Act on Their Beliefs?
Surveys of consumers’ inflation expectations are now a key component of monetary policy. To date, however, little work has been done on 1) whether individual consumers act on their beliefs about future inflation, and 2) whether the inflation expectations elicited by these surveys are actually informative about the respondents’ beliefs. In this post, we report on a new study by Armantier, Bruine de Bruin, Topa, van der Klaauw, and Zafar (2010) that investigates these two issues by comparing consumers’ survey-based inflation expectations with their behavior in a financially incentivized ...
Discussion Paper
A Boost in Your Paycheck: How Are U.S. Workers Using the Payroll Tax Cut?
Over the past several months, there was a flurry of debate in Washington over the extension of the payroll tax cut. Many supporters of the tax cut?worth about $1,000 to a family earning the median income of slightly more than $50,000 a year?have cited its importance to the nation?s economic recovery, while opponents claim that it will only add to the national deficit without boosting the economy. Exactly how such a tax cut affects the aggregate economy relies heavily on how U.S. workers use the extra funds in their paychecks. Unfortunately, we know little about how such tax cuts are used by ...
Discussion Paper
Soaring Tuitions: Are Public Funding Cuts to Blame?
Public colleges and universities play a vital role in training a state?s workforce, yet state support for higher education has been declining for years. As a share of total revenues for America?s public institutions of higher education, state and local appropriations have fallen every year over the past decade, dropping from 70.7 percent in 2000 to 57.1 percent in 2011. At the same time, college enrollment numbers have swelled across the country?public institutions? rolls grew from 8.6 million full-time students in 2000 to 11.8 million in 2011. Faced with dwindling funding from the states, ...
Discussion Paper
Nudging Inflation Expectations: An Experiment
Managing consumers? inflation expectations is of critical importance to central banks in the conduct of monetary policy. But managing inflation expectations requires more than just monitoring expectations; it also requires an understanding of how these expectations are formed. In this post, we present results from a new study that investigates how individual consumers use selected information on food prices in forming their inflation expectations. While the provision of this information leads individuals to meaningfully revise expectations of their own-basket inflation rate, we find there is ...
Discussion Paper
My Two (Per)cents: How Are American Workers Dealing with the Payroll Tax Hike?
The payroll tax cut, which was in place during all of 2011 and 2012, reduced Social Security and Medicare taxes withheld from workers? paychecks by 2 percent. This tax cut affected nearly 155 million workers in the United States, and put an additional $1,000 a year in the pocket of an average household earning $50,000. As part of the ?fiscal cliff? negotiations, Congress allowed the 2011-12 payroll tax cut to expire at the end of 2012, and the higher income that workers had grown accustomed to was gone. In this post, we explore the implications of the payroll tax increase for U.S. workers.
Discussion Paper
(Unmet) Credit Demand of American Households
One of the direct effects of the 2008 financial crisis on U.S. households was a sharp tightening of credit. Households that had previously been able to borrow relatively freely through credit cards, home equity loans, or personal loans suddenly found those lines closed off?just when they needed them the most. In recent months, aggregate statistics such as the Federal Reserve?s Consumer Credit series and the Senior Loan Officer Opinion Survey have shown a gradual improvement in consumer credit. The former series is an indicator of interaction of credit supply and demand, while the latter shows ...
Discussion Paper
Introducing the FRBNY Survey of Consumer Expectations: Measuring Price Inflation Expectations
In this second of a series of four blog postings, we discuss the data on inflationexpectationscollected in our new FRBNY Survey of Consumer Expectations (SCE). Inflation expectations are a key consideration for monetary policy as they are believed to influence consumer behavior, thereby affecting economic activity and actual inflation. The SCE data on inflation expectations represent a major innovation as they contain information not previously collected from consumers on a regular basis. In this post, we provide some background on the survey and presentsome initial findings.