In a recent survey, consumers are anticipating a potential slowdown in wage gains while expressing overall optimism about their financial well-being. The Feds, hinted at the possibility of three rate cuts in 2024, maintaining interest rates for the third consecutive time. These adjustments could influence the economy, making significant purchases such as homes and cars more accessible.
However, this move also marks the end of the era of "peak savings rates," . The December 2023 survey revealed a decrease of over 3 percentage points in the mean probability of savings accounts carrying higher interest rates, reaching 25.92%, the lowest since November 2020. Nevertheless, respondents displayed positive expectations regarding credit access and overall financial health.
Survey participants were notably less pessimistic about their current household financial situations compared to the previous year. The percentage of respondents reporting their financial situation as "somewhat" or "much" worse than a year ago decreased to 38.75%, the lowest since February 2022. Additionally, the share of those foreseeing a somewhat or much worse financial outlook for the year ahead dropped to 25.24%, the lowest since September 2021.
Despite a decline in projected earnings growth to 2.45%, the lowest since April 2021, consumers maintained a positive outlook on the job market. The labor market's resilience, even amid the Feds active rate-hiking measures, contributed to consumer confidence.
The mean probability of expecting a higher unemployment rate in a year also decreased to 38.02%, marking the lowest level since June 2022. Looking ahead, we see some big news coming that could spell trouble ahead.
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