Consumers say it’s harder to obtain credit now than it was a year ago, according to a survey conducted in March.
The Federal Reserve Bank of New York’s Center for Microeconomic Data on Monday released its March 2023 Survey of Consumer Expectations (SCE), which showed that consumers’ perceptions of credit access deteriorated from a year earlier. According to the survey, the share of households reporting it is harder to obtain credit than one year ago rose, reaching a series high
Survey respondents were also more pessimistic about future credit availability, with the share of households expecting it to be harder to obtain credit a year from now also rising.
The report on the survey does not say when in March it was conducted, but the results may reflect the two bank failures that occurred during the month. Both Silicon Valley Bank and Signature Bank failed and were taken over by regulators in March, leading other banks to significantly tighten lending standards.
The survey also found that:
- The median expected growth in household income increased by 0.1 percentage point to 3.3%.
- Median household spending growth expectations increased to 5.7% in March from 5.6% in February. It was the first increase in the series since October 2022.
- The average perceived probability of missing a minimum debt payment over the next three months increased by 0.3 percentage point to 10.9% in March. The series remains below its 12-month trailing average of 11.4%.
- The median expectation regarding a year-ahead change in taxes (at current income level) decreased by 0.1 percentage point to 4.2%.
- Median year-ahead expected growth in government debt declined by 0.3 percentage point to 9.9%. This is the lowest reading of the series since February 2020.
- The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months increased by 0.7 percentage point to 32.9%.
- Perceptions about households’ current financial situations improved in March. Year-ahead expectations about households’ financial situations also improved, with fewer respondents expecting to be worse off and more respondents expecting to be better off a year from now.
- The mean perceived probability that U.S. stock prices will be higher 12 months from now decreased by 1.4 percentage points to 35%.
Expectations about year-ahead price increases for gas, food, cost of rent, and medical care all continued to decline, while expectations for the cost of college education increased. Home price growth expectations rose, but remained below pre-pandemic levels.
Other key findings of the survey:
Inflation
- Median inflation expectations increased by 0.5 percentage point at the one-year-ahead horizon to 4.7%, marking the first increase in the series since October 2022.
- Median inflation expectations increased by 0.1 percentage point at the three-year-ahead horizon to 2.8%, but decreased by 0.1 percentage point at the five-year-ahead horizon to 2.5%. The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) increased at all three horizons.
- Median inflation uncertainty — or the uncertainty expressed regarding future inflation outcomes — increased at the one-year-ahead horizon, decreased at the three-year-ahead horizon, and remained unchanged at the five-year-ahead horizon.
- Median home price-growth expectations increased by 0.4 percentage point to 1.8% in March, remaining far below the 12-month trailing average of 3% as well as the pre-pandemic levels. The increase was most pronounced among respondents with no more than a high school education and for those who live in the Midwest Census region.
- Median year-ahead expected price changes declined by 0.1 percentage point for gas (to 4.6%), 1.4 percentage point for food (to 5.9%), 0.1 percentage point for the cost of medical care (to 9.3%), and 0.2 percentage point for the cost of rent (to 9.2%).
- Median year-ahead expected cost of college education increased by 0.8 percentage point (to 8.9%). All commodity price expectations remain well above their pre-pandemic (March 2020) levels.
Labor Market
- Median one-year-ahead expected earnings growth remained unchanged at 3.0% in March. The series has been moving between a narrow range of 2.8% to 3% since September 2021; March marked the fourth consecutive month it remained at 3%.
- Mean unemployment expectations — or the mean probability that the U.S. unemployment rate will be higher one year from now — increased by 1.3 percentage point to 40.7%. The increase was more pronounced for respondents with at least some college education, those between the ages of 40 and 60, and those with annual household incomes between $50,000 and $100,000.
- The mean perceived probability of losing one’s job in the next 12 months decreased by 0.4 percentage point to 11.4%. The mean probability of leaving one's job voluntarily in the next 12 months also declined by 1.5 percentage point to 19.3%.
- The mean perceived probability of finding a job (if one’s current job was lost) declined by 0.3 percentage point to 57.6% in March. The series has been moving between a narrow range of 57.2% to 58.2% since August 2022.
The SCE is a nationally representative, internet-based survey of a rotating panel of approximately 1,300 household heads. Respondents participate in the panel for up to 12 months, with a roughly equal number rotating in and out of the panel each month.
