Stable inflation expectations and increasing debt repayment risk - new concerns looming over the US economy
① Situation of inflation expectations
- Inflation expectations for one year ahead were 3% in August, slightly higher than the previous month's 2.97%.
- Inflation expectations for five years ahead are 2.8%, roughly the same level as the previous month.
- Although the inflation rate has significantly decreased since 2022, which was a 40-year high, the price level in the USA remains high and continues to burden households.
② Risk of repayment delay
The outlook for debt repayment delays has been increasing for three consecutive months.
The risk of delays has reached its highest level since April 2020.
There is a high possibility that the slowdown in employment and reduced opportunities are causing concerns for households.
③Expansion of uncertainty
The variability of consumer opinions on inflation expectations is increasing.
In particular, the discrepancy (difference between the 25th percentile and the 75th percentile) in inflation expectations for the next one year has widened the most in the past 15 months.
Uncertainty regarding short-term and long-term inflation expectations has increased across all time frames.
④Impact on the overall economy
- There is a possibility that consumer purchasing power may decline due to continued inflationary pressure on household budgets and increasing concerns about debt repayment.
- There is a possibility that the uncertainty of inflation expectations may make it more difficult to determine economic policies.
- There is a risk that stagnation in employment may deepen concerns about the overall economy and lead to a deterioration in consumer sentiment.
⑤ Summary
In general, although there are signs of stability in inflation expectations, the increasing risks of rising debt repayment and expanding uncertainties are causing new concerns for the US economy, requiring cautious responses to future economic policies and consumer sentiment.
- Inflation expectations for one year ahead were 3% in August, slightly higher than the previous month's 2.97%.
- Inflation expectations for five years ahead are 2.8%, roughly the same level as the previous month.
- Although the inflation rate has significantly decreased since 2022, which was a 40-year high, the price level in the USA remains high and continues to burden households.
② Risk of repayment delay
The outlook for debt repayment delays has been increasing for three consecutive months.
The risk of delays has reached its highest level since April 2020.
There is a high possibility that the slowdown in employment and reduced opportunities are causing concerns for households.
③Expansion of uncertainty
The variability of consumer opinions on inflation expectations is increasing.
In particular, the discrepancy (difference between the 25th percentile and the 75th percentile) in inflation expectations for the next one year has widened the most in the past 15 months.
Uncertainty regarding short-term and long-term inflation expectations has increased across all time frames.
④Impact on the overall economy
- There is a possibility that consumer purchasing power may decline due to continued inflationary pressure on household budgets and increasing concerns about debt repayment.
- There is a possibility that the uncertainty of inflation expectations may make it more difficult to determine economic policies.
- There is a risk that stagnation in employment may deepen concerns about the overall economy and lead to a deterioration in consumer sentiment.
⑤ Summary
In general, although there are signs of stability in inflation expectations, the increasing risks of rising debt repayment and expanding uncertainties are causing new concerns for the US economy, requiring cautious responses to future economic policies and consumer sentiment.
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