15.04.2025 09:41
According to the results of the U.S. Federal Reserve's Consumer Expectations Survey for March 2025, consumers' short-term inflation expectations increased by 0.5 percentage points to 3.6%. Additionally, the expectation for an increase in household incomes dropped to 2.8%. Ray Dalio predicted, "We are very close to a recession."
In the United States, consumer expectations for short-term inflation rose by 0.5 points last month, reaching 3.6 percent. The Federal Reserve Bank of New York published the results of the Consumer Expectations Survey for the period ending March 2025.
SHORT-TERM INFLATION EXPECTATIONS INCREASED
According to the results of the survey conducted with approximately 1,300 households, the short-term median inflation expectation for the next 12 months increased from 3.1 percent to 3.6 percent last month. The median inflation expectation for the next three years remained unchanged at 3 percent during the same period, while the median inflation expectation for the five-year period decreased from 3 percent to 2.9 percent.
While there was a deterioration in expectations regarding unemployment, job loss, and income growth, the expectation for an increase in household income fell by 0.3 points to 2.8 percent. During this period, the expectation for cost increases reached its highest level since May 2024 for food at 5.2 percent, while it rose to 7.9 percent for healthcare and 7.2 percent for rent. The expectation for cost increases during the same period decreased to 3.2 percent for gasoline and 6.7 percent for university education.
WILL THE INFLATION JOY BE SHORT-LIVED?
The average unemployment expectation (the average forecast regarding the likelihood of the unemployment rate in the U.S. being higher one year later) rose by 4.6 points to 44 percent. This is the highest level recorded since April 2020. In the U.S., the Consumer Price Index (CPI) decreased by 0.1 percent on a monthly basis in March, while it increased by 2.4 percent on an annual basis, falling below expectations.
FAMOUS INVESTOR'S DOOMSDAY SCENARIO
Famous investor Ray Dalio warned that the U.S. economy could face a situation worse than a recession. The hedge fund billionaire stated, "I think we are at a decision point right now, and we are very close to a recession. I am concerned that if this is not handled well, something worse than a recession will occur."