Digging into the Downward Trend in Consumer Inflation Expectations

Abstract

Since mid-2014, the long-run inflation expectations of consumers have been declining. We analyze University of Michigan Surveys of Consumers microdata and find that a decline in uncertainty about future inflation is a modest part of the story over this period—but it represents the entire story when considering changes in expectations since 2012.

Out of Bounds: Do SPF Respondents Have Anchored Inflation Expectations?

“…We focus primarily on = 0.2 and = 0.5-that is, on whether a forecaster consistently forecasts long-run inflation between 1.8% and 2.2% 1. For other discussions and definitions of anchoring, see Beechey, Johannsen, and Levin (2011), Kumar et al (2015), Binder and Verbrugge (2016), Carvalho et al (2017), Binder (2017), andRich (2018). On disagreement and its distinction from uncertainty, see Mankiw, Reis, and Wolfers (2003), Rich and Tracy (2018), Branch (2004), Patton and Timmermann (2010), Stark (2013), Döpke, Fritsche, and Waldhof (2019), and Mailath and Samuelson (2019).…”

Thinking Outside the Box: Do SPF Respondents Have Anchored Inflation Expectations?

“…2 In previous work (Binder, 2015;Binder and Verbrugge, 2016;Binder, 2017b) we have examined household inflation expectations. At least in the U.S., there are no long panel data on the inflation expectations of households, although the short panels that are available still yield important insights (Binder, 2017a).…”