“Reflecting on Top Personal Finance Trends in 2024: Economic Growth, Consumer Optimism”

A review of personal finance trends in 2024

Reflecting on 2024, we witnessed consumer sentiment data highlighting a positive outlook towards the economy and personal finances, a stark contrast to the frustration over elevated prices seen four years ago. Households ended the year feeling more optimistic about their financial future, with a significant number expecting a better financial situation in the year ahead. This heightened optimism combined with a robust economic picture painted 2024 as a good year for consumers despite some challenges.

Let’s take a look at the top trends in personal finance and the economy in 2024, and the predictions for what lies ahead in 2025.

Steady economic growth

Throughout 2024, the U.S. economy showed resilience in the face of high inflation and high-interest rates. Wage growth was robust, driven by an increase in productivity. This led to healthy spending, boosting the economy’s growth rate. While the labor market cooled compared to 2023, price growth moderated towards the Federal Reserve’s 2% inflation goal, signaling a steady economy.

With no major changes to economic policy and barring any significant shocks, the U.S. economy is expected to continue growing at a moderate pace in 2025.

High returns on savings accounts

The year also saw high-yield savings accounts and certificates of deposit offering elevated rates, providing savers with strong returns. Despite rate cuts in the second part of the year, high-yield accounts continued to outperform traditional savings accounts and CDs. With further Federal Reserve rate cuts expected in the future, savers need to keep an eye on potential decreases in savings rates.

A boom in small businesses

Business applications remained well above pre-pandemic levels, suggesting a boom in new businesses in 2024. The future state of the U.S. economy also spiked optimism after the presidential election, although concerns over rising costs and labor quality tempered this sentiment.

The incoming administration’s potential tariffs, tax policy changes, and dismantled government regulations have small-business owners braced for turbulence. The possibility of interest rate cuts in 2025 and the growing reliance of small-business owners on new technologies are also factors to watch.

Challenges in home buying

Home buyers dealt with elevated mortgage rates, rising house prices, and a shortage of homes for sale in 2024. Despite these challenges, there’s hope for the future. With the Federal Reserve expected to cut short-term interest rates, buyers can look forward to more properties to choose from, and the greater supply should prevent prices from rising dramatically.

The bull market of cryptocurrencies

Cryptocurrency experienced significant gains in 2024, with Bitcoin crossing the $100,000 mark for the first time in December. However, the future depends on how fast the Fed reduces rates and the uncertainties around Trump’s second term. Regulatory rollbacks could spike stock prices, but they could also create systemic risks in the economy.

Rising premiums for home and auto insurance

In 2024, many people saw their home and auto insurance premiums skyrocket. Life insurance rates, on the other hand, started to decrease post-pandemic. While auto and home insurance costs are expected to rise, auto premiums may not rise as dramatically as they have over the past few years.

Uncertainty over student loan relief

The past year saw historic student loan relief for borrowers, but lawsuits over an income-driven repayment plan created uncertainty that will carry into 2025. With Trump having pledged to overhaul higher education and rein in student loan relief, the future of the SAVE repayment plan and student loan forgiveness options remains uncertain.

Trump’s election victory and promises of tariffs and deportations

Following a contentious presidential campaign, former President Donald Trump won the election over Vice President Kamala Harris. Trump’s campaign promises of lower inflation, tax cuts, tariffs, weakened Federal Reserve power, and deportations have economists predicting potential inflationary effects. With Republicans controlling both houses, it’s unclear which campaign promises will be fulfilled.

Originally posted on NerdWallet.