Digging into the Downward Trend in Consumer Inflation Expectations

Carola Binder and Randal Verbrugge

Economic Commentary, 2016, issue September

Abstract: Since mid-2014, the long-run inflation expectations of consumers have been declining. Many commentators blame the decline on gasoline prices, which have also been falling since that time, but we argue that this explanation is incomplete. We analyze University of Michigan Surveys of Consumers microdata and find that a decline in uncertainty about future inflation is a modest part of the story over this period?but it represents the entire story when considering changes in expectations since 2012.

Keywords: uncertainty; inflation expectations (search for similar items in EconPapers)
Date: 2016
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