Americans expressed fears that inflation would increase, primarily due to expectations that gas prices would rise sharply, results of a new survey from the Federal Reserve said.
The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the October 2022 Survey of Consumer Expectations, which shows the median inflation expectations increased at both the one- and three-year-ahead horizons in October, by 0.5 and 0.2 percentage points, respectively, to 5.9% and 3.1%.
Meanwhile, median five-year-ahead inflation expectations, which have been elicited in the monthly SCE core survey on an ad-hoc basis since the beginning of this year and were first published in July 2022, increased by 0.2 percentage points to 2.4%.
While home price growth expectations were unchanged, the expected change in the price of gas increased sharply. The median expected change in gas prices rose by 4.3 percentage points to 4.8%, the largest one-month increase on record. Expectations about year-ahead price changes rose by 0.7 percentage points for food (to 7.6%) and 0.1 percentage points for rent (to 9.8%).
Unemployment expectations reached the highest level since April 2020. Expectations that the mean probability that the U.S. unemployment rate will be higher one year from now increased to 42.9% from 39.1% in September.
The Fed released the survey results after the latest CPI report showed that inflation slowed in October.
With inflation still high — and with expectations that it will remain high for the short-, medium-, and long-term—investors can expect markets to remain volatile. That’s where active management can come in handy.
While passive strategies lack the flexibility to adapt to changing market environments, active ETFs can offer the potential to outperform benchmarks and indexes. Plus, active managers with greater resources and greater scope benefit from economies of scale, which can often translate to better returns.
“Active managers have the flexibility to take advantage of market volatility and add to favored positions when prices become more attractive,” said Todd Rosenbluth, head of research at VettaFi.
T. Rowe Price offers a suite of actively managed ETFs. T. Rowe Price has been in the investing business for over 80 years through conducting field research firsthand with companies, utilizing risk management, and employing a bevy of experienced portfolio managers carrying an average of 22 years of experience.
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