Gauge of Spending Optimism Rises to Highest Since 2014

African American man shopping in clothing store
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In another sign of increasing optimism about the U.S. economy, a measure of consumer interest in spending rose for a second month in February, this time to its highest level since 2014.

Households surveyed by the New York Federal Reserve Bank last month said they planned to spend a median 4.60% more in the coming year, more than they’ve projected to spend at any point since December 2014 and more than twice as much as they’d expected in the early phases of the COVID-19 pandemic. In January, households were expecting 4.22% growth over the next year.

The survey findings, released Monday, add to increasing signs consumers are anticipating a return to normal life as virus cases decline and the rollout of vaccines continues to ramp up. What’s more, the personal savings rate is more than double what it was before the pandemic, so many households are armed with lots of cash—an extra $1.7 trillion by one count—as they contemplate the economy more fully re-opening. 

Other readings also reinforced the optimism: in the most encouraging outlook for household earnings since the pandemic began, consumers are expecting median earnings growth of 2.2% in the coming year, up from about 2% in each of the previous seven months.

Meanwhile, consumers are bracing for higher prices, reporting they expect gas prices to increase a median 9.59% in the coming year and rent costs to increase 9.04%. Both were the highest anticipated increases recorded since the survey began in June 2013. 

To be sure, households continue to feel some uncertainty in the pandemic economy: the perceived probability of losing a job over the next year ticked up slightly while the perceived probability of finding a job worsened slightly. 

The NY Fed’s Survey of Consumer Expectations is a nationally representative, internet-based survey of about 1,300 heads of household. Respondents participate in the panel for up to 12 months.