1 and 3 year inflation expectations fall slightly in May

Fed survey of consumers.

The Fed survey of consumers in May is showing:

• 1 year and 3 year median consumer expectations fall to lowest since late 2017 in May
• 1 year inflation expectations fall to 2.5% in May, down from 2.6% in April
• 3-year inflation expectations fall to 2.6% in May, down from 2.7% in April
• Consumer expectations that unemployment will rise a year from now increases 1% from 36.7% from 35.7% in April
• Expectations for higher earnings rebound to 2.5% in May from 2.36% in April which was the lowest since November
• Consumer expectations on gasoline prices fall to the lowest since February in the month of May

The Fed is does not want to see inflation expectations going the wrong way. Although modest, and still above the 2% target, a Fed that is contemplating policy (did it go too far?) would prefer to see steady expectations.