2024 Economy Review: 6 Big Things That Happened
Written by
Angela Mae
Edited by
Levi Leidy
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A lot happens in any given year, but especially in presidential election years. In 2024, inflation came down, Donald Trump won office for a second time (and the market reacted) and some other major economic changes occurred.
Heading into 2025, it helps to know what’s happened in 2024. While these major changes aren’t necessarily signs of what’s to come, they certainly can be.
Here are five big things that happened to the economy in 2024.
Inflation Rates Fell
Investors and individuals alike have been worried about inflation, especially in recent years. In June 2022, inflation reached 9.1%, according to the BLS. A year later, it was around 3%.
By September of 2024, it’d fallen to 2.4%. Considering the target inflation rate is between 2% and 3%, this is surprisingly good news for U.S. consumers.
Trump Won the Election
What happened on Nov. 5, 2024, can’t be overlooked either. After all, it was a pivotal day in American history — and it had quite an impact on markets, at least in the short term.
In reaction to Trump’s win, the S&P 500’s earnings grew by 13% over the year. On election day, earnings were at $5,783. Less than a week later, they were at $6,001 and have been steadily increasing since.
Meanwhile, U.S. Treasury securities (10-year constant maturity) also went up. On Nov. 4, it was at 4.31. The day after the election, it was at 4.42.
Bitcoin has also seen a significant increase. On Nov. 4, it was at $69,122. The day after the election, it’d risen to $74,446 and has continued to rise ever since. This could be for any number of reasons, one of which could be that the cryptocurrency industry is currently anticipating deregulation under the Trump administration.
Other Market Changes
Not all major market changes were a direct result of the presidential election, though that’s certainly had an impact on many areas of the economy.
Earnings for the largest U.S. companies rose by 5.8% over the past 12 months. Wall Street, by comparison, only expected a 3.5% increase. Many industries have continued to outperform their previously anticipated rates but tech in particular has thrived, accounting for 30% of the total S&P 500 index’s earnings growth.
Notably, commodities like gold (up 4.2%) and oil (up 4%) also rose higher than ever these past few months. Other areas that have seen significant increases this year include multiples (11% expansion), U.S. large cap equities (25% growth), high-yield bonds (8% increase), Bitcoin (12% increase) and private credit (8% growth).
Gigantic Layoffs
Unfortunately, it’s not all been good news. In 2024, many major companies saw an increase in mass layoffs.
According to R&D World, 526 major companies across different sectors were impacted by these layoffs. The combined number of layoffs numbers nearly 150,000.
Breaking this down further, Intel laid off 15,000 people, Tesla laid off 14,000, Dell laid off 12,500 and Cisco laid off 9,900. Even Amazon was affected, having cut its staff by 9,000. Many of these companies have incorporated AI into their business model, which may have had an impact on these increased layoffs.
What’s worth noting is the overall national unemployment rate. U.S. Bureau of Statistics data shows that it was at 14.8% in April 2020 (during the height of the pandemic). By midway through 2022, it’d fallen to 3.7%. It’s risen somewhat since then to 4.2%.
The Effective Federal Funds Rate Has Fallen
The federal funds rate plays a key role in long-term financing interest rates — including mortgages. Generally, a higher rate means lenders will set higher interest rates as well. This in turn leads to increased financing costs and greater overall interest payments.
As of November 2024, the federal funds rate is 4.58%. For most of 2024, it was 5.33%. This overall decrease could be a good sign for those seeking a mortgage or other forms of financing.
Housing Prices Have Increased
The typical rate on a 30-year fixed-rate mortgage is 6.6% as of Dec. 12, 2024. It’s fallen by 0.35% year-over-year. For 15-year fixed-rate mortgage loans, the average rate is 5.84%, a 0.54% one-year decrease.
Although interest rates have gone down slightly, housing prices have not. As per Zillow data, the average U.S. home value is up 2.5% on the year at $357,469. The median existing home sales price is $407,200. A year ago, it was $391,600. During this time, existing home sales also increased by 3.4%.
Potential for Future Changes
Between the presidential election and ongoing changes in the U.S. economy, there’s also the potential for significant future changes going forward into 2025.
According to JPMorgan, “The new administration is likely to bring significant change that could further support the recovery in deal-making and capital market liquidity. That could include replacing U.S. government agency leadership with personnel less inclined toward heavy regulation.”
However, only time will tell.
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