Fewer Americans are optimistic about the economy in 2024

MINNEAPOLIS – Jan. 2, 2024  – Less than half of Americans think the economy will improve in 2024 while many Americans are keeping more money out of the market, according to the Q4 Quarterly Market Perceptions Study from Allianz Life.

Just 47% of Americans say they think the economy will improve in 2024. This optimism has gone down in recent years. In Q4 2020, 66% of Americans said they thought the economy would improve in the coming year (54% in Q4 2021 and 48% in Q4 2022).

 

Market uncertainty and interest rates could be driving that view. Three in four Americans (74%) say they think the market will be very volatile in 2024. Even more, 77% think interest rates will continue to rise in the coming year.

 

Americans feel better about their personal finances. Most Americans (60%) say they think their financial situation will improve in 2024. Still, that number is down from 67% in 2020, 65% in 2021 and 61% in 2022.

Millennials are the most optimistic about their own economic potential in 2024. Two in three (67%) millennials say they think their financial situation will improve in the coming year compared to 59% of Gen Xers and 51% of boomers. Yet, millennials in particular are nervous to invest. While 51% of millennials say they are too nervous to invest in the market right now, just 40% of Gen Xers and 37% of boomers say the same.

 

Prices are still too high

 

Many Americans still feel the effects of recent inflation. Two in three (67%) say that prices are still too high and they are struggling to stay afloat in the pasts three months. Others (28%) say inflation is not affecting them personally. Moreover, Americans would like professional help to mitigate the risk. Financial professionals should take note as three in four Americans (74%) said they would stop using their current financial professional if they didn’t help effectively manage ongoing inflation concerns.

 

The effect of inflation on interest rates is also causing many to keep money out of the market. Most Americans (55%) say they are keeping more money in high-yield savings accounts or money market funds because of interest rates. Of millennials, 65% say they are keeping more money in high-yield savings accounts or money market funds because of rising interest rates. Fewer Gen Xers (46%) and boomers (48%) said the same. The majority of Americans (61%) also say they would rather have their money sit in cash than endure market swings.

 

“High interest rates in savings accounts or money market accounts can be enticing,” says Kelly LaVigne, Vice President of Consumer Insights, Allianz Life. “A high-yield savings account is a good place to build an emergency fund or save up for something in the near future. But, those accounts aren’t likely to provide the greatest return on money over the long term. For long-term goals like retirement, you’ll want to take part in the market and invest in ways that still mitigate potential risks like longevity and inflation.”