NY Fed Sees Four-Year High in Consumers Expecting to Miss Minimum Debt Payment

A growing percentage of consumers think they could miss a minimum debt payment in the next three months.

Consumers’ delinquency expectations increased for the fourth consecutive month in September and reached the measure’s highest level since April 2020, according to a Tuesday (Oct. 15) press release about the Survey of Consumer Expectations published by the Federal Reserve Bank of New York’s Center for Microeconomic Data.

The average perceived probability of missing a minimum debt payment over the next three months was gauged at 14.2% in September, according to the release.

“The increase was most pronounced for respondents between ages 40 and 60 and those with annual household incomes above $100k,” the release said.

The survey also found that consumers are more pessimistic about the rate of inflation than they were a month ago.

While consumers’ inflation expectations remained unchanged at the short-term horizon, they increased slightly at the medium- and longer-term horizons, according to the release.

From August to September, median inflation expectations at the one-year horizon remained unchanged at 3.0%, but those for the three-year horizon rose from 2.5% to 2.7% and those for the five-year horizon inched up from 2.8% to 2.9%, per the release.

“The increases at the three- and five-year horizons were most pronounced for respondents with at most a high school degree,” the release said.

Median home price growth expectations decreased by 0.1 percentage point to 3.0%, putting it at the low end of the range of 3.0% to 3.3% that has been seen since August 2023, according to the release.

Year-ahead commodity price expectations for food increased by 0.1 percentage point, those for the cost of college remained unchanged, and those for gas, rent and medical care decreased by 0.2, 1.0 and 1.4 percentage point, respectively, per the release.

This report came four days after preliminary results from the University of Michigan Surveys of Consumers for October found that continued frustration over the price of goods and services drove an unexpected decline in consumer sentiment.

Consumer sentiment dipped 1.7%, marking a change from the gains seen during the previous two months. Still, it remained 8% stronger than a year ago and almost 40% higher than the low point seen in June 2022.

“While inflation expectations have eased substantially since then, consumers continue to express frustration over high prices,” Joanne Hsu, director of the Surveys of Consumers, said in a press release announcing these findings.