Us Inflation Expectations Remains Stable

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Us Inflation Expectations Remains Stable

Us Inflation Expectations Remains Stable In March

recent survey shows that the inflation and consumer sentiment expectations in the USA remained stable in March.

The change in these metrics changed only a little which is why the keyword 'stable' was used. According to a survey from the University of Michigan, the consumer sentiment index was 76.5.

In February, the reading was 76.9, which suggests that the change was -0.4%, while the economist's forecast was 76.9. Overall, the survey shows that the US consumers remain unchanged about the improvement or worsening of the economic indicators.

5-Year Inflation Forecast Came Out At 2.9%

As for why the US consumers are withholding their judgment, experts believe that it has to do with the upcoming November election. After all, the long-term direction of the US economy depends on which party wins the upcoming elections.

The survey also showed that the inflation expectations for one year are near 3.0% during March. When compared with the last reading, the reading remains unchanged.

The forecast of inflation for the 5-years is also near 2.9% with no change at all. Over all, that's the 4th consecutive month that the 5-year inflation forecasts remain unchanged.

Although the survey only shows consumer sentiment and expectations regarding inflation, it is still very relevant. The markets believe that inflation is on the path to 2.0%, and the rate cuts are coming in the next few months.

On the contrary, the US consumers believe that inflation will remain near 2.9% in the next 5 years. That means there's a difference of +0.9% in the inflation forecast made by the US consumers and the market players.

And if we look at the inflation forecast (1 year), it is near 3.0%, which is also +1.00% higher than the 2.00% target set by the Federal Reserve.

So, if inflation indeed remains high and doesn't come down even in a 1-year timeframe, then the markets can forget about Federal Reserve rate cuts in 2024 and even next year.

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