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Introducing the FRBNY Survey of Consumer Expectations: Labor Market Expectations

Olivier Armantier, Giorgio Topa, Wilbert van der Klaauw, and Basit Zafar: “In the previous two blog postings in this series, we described the goals, structure, and content of the new FRBNY Survey of Consumer Expectations (SCE) and presented some findings regarding inflation expectations. In this third posting, we focus on the labor market component of the SCE. The survey’s monthly core module contains questions regarding respondents’ current labor force status, including self-employment. In addition, for those currently employed, we elicit year-ahead expectations of earnings growth, of the likelihood of voluntary separations (quits) and involuntary separations (layoffs), and of the likelihood of finding and accepting a job within three months if the individual were to lose it today. Respondents are also asked about the likelihood of their moving to a different primary residence in the next year. Taken together, responses to these questions yield new quantitative measures that enable us to gauge households’ perceptions of prospective labor market conditions—perceptions that are likely to affect job search behavior and labor market outcomes. In addition, high-frequency data on wage growth expectations can provide important new insights. Like inflation expectations, wage expectations affect consumer intertemporal decisions, and are therefore of great value for understanding and forecasting economic behavior. Moreover, since price-setting behavior by firms is at least partly dependent on wage demands, expected wage dynamics may be an important determinant of actual and expected inflation.”

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