Economic mood is improving, though affordability and housing outlook weigh heavily on consumer confidence
Most Americans are financially stable, but housing-related concerns continue to weigh on consumer sentiment.
About 73% of US adults reported being “okay” or “living comfortably” financially as of October 2024, holding steady from 72% in 2023, though still below the 2021 peak of 78%, according to the Federal Reserve’s latest Survey of Household Economics and Decisionmaking (SHED), released Wednesday.
Meanwhile, the percentage of people who could cover a $400 emergency with cash or its equivalent stood at 63%, roughly consistent with recent years.
Despite modest gains in economic outlook, pessimism remains entrenched. Just 29% of adults rated the national economy as “good” or “excellent,” an improvement from 22% in 2023, but still a far cry from the 50% seen pre-pandemic in 2019.
The share of adults who reported being worse off than a year ago dropped to 29%, down from a record-high 35% in 2022. Still, the number remains higher than pre-pandemic levels.
Sluggish housing sentiment
Housing affordability remains a central concern. Median rent has climbed approximately 10% annually since 2022, further straining household budgets.
Uncertainty among buyers and homeowners is growing. According to the latest Bank of America Homebuyer Insights Report, 60% of Americans said they were unsure whether now is a good time to purchase a home, up from 48% two years ago.
Still, a majority of prospective homebuyers are cautiously optimistic. About 52% believe the market has improved compared to a year ago, and 75% expect lower home prices and interest rates ahead, up from 62% in 2023.
“With so many factors impacting the homebuying market, prospective buyers and current homeowners are left wondering what it all means for them,” said Matt Vernon, head of consumer lending at Bank of America. “As our research shows, a majority of buyers feel the market is headed in the right direction, but many are still planning to wait for more favorable conditions before they decide to take action.”
Inflation stress
Persistent inflation, particularly rising food and grocery prices, remains a top concern, though fewer respondents than in 2023 said it had worsened their finances.
Labor market conditions appeared steady. The percentage of adults starting new jobs was unchanged from the previous year, but only 62% of those with new roles considered them “better overall,” down from 72% in 2022. Layoff and voluntary quit rates also held steady year-over-year.
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Debt stress, however, is growing. The report highlighted a sharp increase in late payments on “buy now, pay later” programs, nearly 25% of users missed a payment in 2024, up from 18% the previous year.
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