Consumers Increasingly Expect Growth in Public Assistance Programs

Consumers are more likely to expect an expansion of public assistance programs than they were a year ago.

Among the programs about which they have increased optimism are federal student aid, student debt forgiveness, federal welfare programs, unemployment benefits and the federal minimum wage, the Federal Reserve Bank of New York’s Center for Microeconomic Data said in a Tuesday (May 28) press release.

These findings come from the Center’s April 2024 Survey of Consumer Expectations (SCE) Public Policy Survey.

The percentages of consumers expecting an expansion in federal student aid or Pell grants and in federal student debt forgiveness rose sharply over the past year, reaching 32.9% and 39.0%, respectively, according to the release.

“These are the highest readings since August 2022 for both series,” the Center said in the release.

Expectations of increases in housing assistance or affordable housing as well as free or subsidized public preschool education remained “relatively stable,” while the perceived likelihood of increases in federal welfare, unemployment, Medicare and Social Security benefits increased, per the release.

Consumers perceived prospects of an increase in the federal minimum wage “rose sharply,” while those of an expansion in paid parental leave declined, according to the release.

“The series remains somewhat above the levels observed before the 2020 presidential election,” the Center said in the release, speaking of these two labor market policies.

The SCE Public Policy Survey also asked consumers about their expectations around taxes and fees, according to the release.

“The average likelihood of an increase in the mortgage interest deduction has reached a series high of 24.8% in April 2024, from 21.1% in April 2023,” the Center said in the release.

When it comes to other taxes and fees, consumers are more likely to expect increases in the gasoline tax, the average income tax rate, the payroll tax and the state’s public college tuition, and less likely to expect a rise in the capital gains tax rate and the tax rate for the highest income bracket, according to the release.

In the case of consumers’ expectations of a rise in tuition, it reached a new series high, the release said.

The release of these findings comes about two weeks after the Center released other survey data showing that consumers expect inflation to settle in for the long haul.

That survey found that consumers expect inflation to be higher one year from now, slightly lower at the three-year mark and then higher than had been seen previously for the five-year horizon.