The issues with online surveys are very, very similar to the issues that folks have with non-response rates via phone surveys. You’ve got to address them one way or another in this current world, and my view is that we are able to provide a lot of value by doing the high-frequency large-scale surveys.
Short-term inflation expectations get short shrift. The Federal Reserve and many economists tend to focus on longer-term expectations when assessing whether expectations are well anchored. Your longer-term expectations data aren’t ready yet for public eyes, but in the meantime, why should we pay attention to the short-term expectations?
Our very preliminary take is that in our data it does not look like there’s a noticeable difference between 12-month and the five-year [inflation expectations]. The respondents do not seem to be as sensitive to the time horizon as what you see in some of these other surveys.
[Short-term] inflation expectations are certainly important for the wage-setting process, probably not in the U.S. as much as in Europe and places where they have a more unionized labor force and they go through a more formal wage-setting process. They’re coming up with their forecasts for inflation essentially, which they use to inform their wage bargaining. In the U.S., we essentially have rolling periods of wage negotiation since there’s fairly low union coverage. And I think that again doubles down on the need to have higher-frequency data, and I think the 12-month time horizon is appropriate.
Jonathan Levin has worked as a Bloomberg journalist in Latin America and the U.S., covering finance, markets and M&A. Most recently, he has served as the company's Miami bureau chief. He is a CFA charterholder.