2024 Economy: Most Americans Still Spooked by Inflation, Recession Worries, According to Study
Written by
Vance Cariaga
Edited by
Nicholas Morine
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There’s plenty to like about the U.S. economy heading into 2024. Inflation is way down from a year ago, GDP growth keeps beating expectations and employers have added an average of 239,000 jobs a month in 2023. Consumer confidence even rose slightly in November following three straight months of declines. Despite those cheery trends, many Americans remain edgy about the economy as the new year approaches.
Roughly two-thirds of consumers surveyed in November still perceive a recession to be “somewhat” or “very likely” to occur over the next 12 months, according to a report this week from The Conference Board. That figure is consistent with the “short and shallow” recession the Board expects during the first half of 2024.
High prices also remain a worry for many consumers — even though the year-over-year inflation rate fell to 3.2% in October from 3.7% the month before. As the CFO Dive website reported last week, consumer “long run” expectations for inflation recently rose to the highest level since 2011, according to Joanne Hsu, consumers director at the University of Michigan.
“These expectations have risen in spite of the fact that consumers have taken note of the continued slowdown in inflation,” she said. “Consumers appear worried that the softening of inflation could reverse in the months and years ahead.”
Despite Some Strong Showings For U.S. Economy, Americans Aren’t Convinced
Oddly, the gloomy consumer outlook comes after a “red-hot” 2023 third quarter in which GDP growth was revised up to a 5.2% annualized increase, according to a Wednesday research note from Bill Adams, chief economist at Comerica Bank. On the downside, the economy is “slowing” in the fourth quarter amid declines in retail sales, industrial production and new home sales.
Recession and inflation worries continue to haunt consumers in 2023 despite the economy’s resiliency. A survey of 1,518 middle-income earners conducted earlier this year by financial services firm TruStage found that 60% of respondents believe their financial situation is not improving because of inflation and recession fears.
More than eight-in-10 (85%) of those surveyed cited rising prices as a worry, with 90% saying they were concerned that inflation will impact their financial well-being. Another 60% said they are either making trade-offs or neglecting necessities to afford groceries.
Inflation, higher taxes and market uncertainty were top concerns among each group surveyed. Most expected a recession to “at least somewhat” impact their personal financial situation.
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