Why Many American Families Feel Financially Insecure Going Into 2024 (2024)

FAQs

Why Many American Families Feel Financially Insecure Going Into 2024? ›

The high cost of living, wealth inequality and job market uncertainty have all contributed to financial vulnerability, even among wealthy families. Concerns about personal debt, including credit card, auto loan and medical debt, are significant sources of financial stress.

Inflation, lack of savings and credit card debt

Among those who consider themselves to be living paycheck to paycheck, financial stressors vary. Their worries are not surprising. Inflation has been rising in 2024, according to the Bureau of Labor Statistics, even if incrementally.

The US Bureau of Labor Statistics indicated that the shock to food and energy prices, supply chain issues, and an increased demand for products all contributed to the sharp rise in inflation. Fast forward four years and most Americans are still struggling.

One big culprit fueling financial anxiety is the high cost of living. Feelings of financial insecurity among Americans have reached their highest point in at least a decade. A third of American adults in Northwestern Mutual's 2024 Planning & Progress survey said they don't feel financially secure.

The causes of financial instability

Financial instability occurs when shocks to the financial system interfere with information flows so that the financial system can no longer do its job of channeling funds to those with productive investment opportunities.

Key Takeaways. S&P Global Ratings expects U.S. real GDP growth of 2.5% in 2024 as the labor market remains sturdy. We continue to expect the economy to transition to slightly below-potential growth in the next couple of years.

Economic growth is projected to slow in 2024 amid increased unemployment and lower inflation. CBO expects the Federal Reserve to respond by reducing interest rates, starting in the middle of the year. In CBO's projections, economic growth rebounds in 2025 and then moderates in later years.

Why is financial stress so common? Finances play a significant role in our daily lives, from being able to afford food and housing to achieving our future goals. Financial stress can come from a number of related factors, including paying bills, managing debt and having enough savings.

Additionally, more than half of Americans (55%) report having a love-hate relationship with money and that they: Sometimes overfocus on how much money they have or don't have (60%) Always worry about money even when they have enough (56%)

A recent survey conducted by the American Psychological Association indicates that as many as 8 out of 10 Americans are stressed because of money concerns. In addition: 50% are stressed about their ability to provide for their family's basic needs. 56% are concerned about job stability and workload.

Are more people struggling financially? ›

According to a recent Ramsey Solutions study, 34% of survey respondents indicated that they were either facing financial struggles or were actively in crisis. That's a huge percentage of people -- more than one-third of all respondents -- who are not feeling good about their personal finances.

A full third of respondents, 33%, reported feeling financially insecure—up from 27% in 2023, and the highest share since Northwestern Mutual began measuring financial security in 2012. Just 41% of respondents reported feeling very financially secure, the smallest share in the report's history.

Americans are more than two times more likely to feel financially insecure than secure. Slightly more than 1 in 4 (28 percent) Americans say they are completely financially secure.

U.S. real GDP growth on an annual average basis will be 2.3 percent in 2024, 1.5 percent in 2025, and 2.2 percent in 2026. National job growth will weaken sharply to only 35,000 monthly gains in the second half of 2024, rebounding to 115,000 job gains by late 2025 as aggressive Fed rate cuts spur investment spending.

According to Wang and Tyler, the economic data should "give more confidence that the US economy is recovering in additional sectors" and that "recession fears for 2024 are likely to be pushed into 2025."

The 2024–25 Outlook

We expect growth to rebound to a 2.0 percent pace by 2025Q1 and stay in that range through yearend. On a Q4-to-Q4 basis, real GDP grows by 1.8 percent during 2024 and 2.2 percent during 2025.

The economic data should “give more confidence that the US economy is recovering in additional sectors and recession fears for 2024 are likely to be pushed into 2025”, it noted. This means that if there was a potential recession it is pushed back to 2025 because of the solid manufacturing data.