Households are holding up both their unemployment expectation and their spending expectation

What does the survey measure?

In the July survey the one-year-ahead inflation expectation fell 0.1 percentage point to 3.6 per cent, while the three-year expectation held at 3.3 per cent and the five-year at 3.0 per cent. On the labour side the mean probability that unemployment will be higher in a year rose to 42.8 per cent and the probability of finding a job rose 1.3 points to 46.2 per cent, with the perceived probability of job loss at 14.2 per cent. Expected spending growth was 4.9 per cent and expected home price growth 3.2 per cent.^[1]

These numbers measure belief. The survey was fielded between 1 and 31 July with roughly 1,300 household heads, according to the Federal Reserve Bank of New York, so the field period closed before the employment release. A household's expected spending growth is a stated intention; for it to become realized demand, income, credit or savings has to meet it.^[1]

Which balance sheet carries the expected spending?

The income side was updated in the same week. Nonfarm payrolls fell 23,000 in July, May and June were revised down by a combined 103,000, and private-sector average hourly earnings were 3.2 per cent higher over the year. The distance from the 4.9 per cent spending growth households expect has to come from outside wage income: from credit, from savings or from longer hours. On the credit side the survey found perceptions of current access worsening while expectations of future availability improved, and those two answers do not face the same way.^{[1], [2]}

This is not the only reading. Households can simply revise the intention down; expected spending carries no commitment, and the survey does not measure how much of it is realized. The 1.3 point improvement in the job-finding probability may also reflect conditions across July, since the field period closed before the employment release and does not cover the days after it.^{[1], [2]}

The distance between expectation and outcome

The distinction has a testable edge: if households' expected spending growth keeps running clearly above realized consumer spending, the expectations channel is not carrying demand on its own. That nothing moved at the three- and five-year ends of the inflation question matters here: households see the price path as steady while seeing their own job security as worse. Two beliefs sitting side by side like this show that an expectation is not by itself a forecast of demand.^[1]