NY Fed Survey Finds Americans More Downbeat On Credit Access
Americans said last month that access to credit was at its toughest level in nearly a decade, as they also braced for higher levels of inflation over the next few years, a report from the New York Fed said Monday.
In the March Survey of Consumer Expectations, the bank found that the share of households who said credit is harder to get versus a year ago rose to the highest level in a survey that dates back to 2014. The bank's report also said, "respondents were more pessimistic about future credit availability as well, with the share of households expecting it will be harder to obtain credit a year from now also rising."
Meanwhile, households project that inflation a year from now would stand at 4.7%, versus February's 4.2%. That was the first increase in year-ahead expected inflation since October. Inflation three years from now is seen at 2.8%, from 2.7% the prior month, while five years out, survey respondents said they expected inflation at 2.5%, down from the prior month's 2.6%.
Despite expectations of higher near-term inflation, respondents to the New York Fed survey see lower gasoline, food and rent costs, while they forecast a 1.8% rise in home prices.
The rise in inflation expectations could prove to be a new challenge for the Federal Reserve's effort to lower inflation. Central bankers broadly believe that where the public expects price pressures to go exerts a strong influence on where inflation is now. Over the last year the Fed has been engaged in a very aggressive campaign to lower inflation, now at 5%, back to 2%, and signs inflation may be starting to cool off has opened the door to an end to the rate rise cycle.
Fed rate rises are by design intended to make credit more expensive, so the rise in households reporting trouble in getting loans is not surprising. That said, survey respondents said their current and future financial situations improved in March, amid expectations of both higher household incomes and spending.
While the Fed report does not mention the situation, the survey took place in a month where the financial system was rattled by the failure of Silicon Valley Bank and troubles at other financial institutions, which has led the Fed to lend significant amounts of money to the banking community. Fed officials have stressed they view the banking system as solid and they see trouble spots as isolated.
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