2024 in Review: Economic Trends, Challenges, and Predictions

In the latest episode of the Market Pulse Podcast, the USIS Equifax Advisors -- Em Aliff, Tom O’Neill, Dave Sojka, Maria Urtubey and I -- reflect on the economic events of 2024 and discuss what they mean for the year ahead. The conversation touched on interest rates, inflation, housing, the labor market, and consumer credit behaviors, highlighting how these factors shaped the year for businesses and individuals.

Interest Rates: The Year of Rate Cuts

We kicked off the discussion with interest rates, noting their central role in economic conversations throughout 2024. Dave Sojka provided a recap of the year’s movements.

“Coming out of the pandemic, the Federal Open Market Committee (FOMC) started the year with a federal funds rate of 5.5%. We saw a 50-basis point cut in September, followed by a 25-basis point cut in November, bringing the rate down to 4.75%.” These cuts aimed to achieve a “soft landing,” avoiding a recession while easing credit conditions. 

Reflecting on the year, Dave concluded, “I think most economists would agree the Fed has done a fairly good job at that.”

Inflation: Progress Amid Persistence

Inflation was another theme of 2024, as consumers and businesses continued to feel its effects. Dave highlighted the challenges: “Inflation’s been on the mind of every American this year. While overall consumer prices rose 2.6% over the past 12 months, certain categories—like shelter and auto insurance—remained stubbornly high.”

Despite these challenges, there were some bright spots. “Energy prices were actually down nearly 5%, which is surprising given the turmoil in the Middle East,” Dave noted. He also mentioned that wages outpaced inflation in the latter half of the year, offering some relief to consumers.

Housing Market: A Volatile Year

The housing market stabilized somewhat, but at lower activity levels due to high mortgage rates. 

Em Aliff provided deeper insight, noting, “Mortgage rates experienced significant volatility this year, largely driven by bond market movements, economic data, and geopolitical events.”

Em emphasized the challenges for homebuyers and homeowners alike: “The average 30-year fixed mortgage rate hovered around 7%, making it difficult for many to purchase or refinance. Delinquency rates on mortgages, particularly from the 2023 vintages, also saw slight increases.”

Reflecting on the broader implications, Em explained, “For rates to drop further, we’d need to see inflation consistently below target levels month over month. Until then, affordability remains a significant challenge in the housing market.”

Labor Market: Resiliency Amid Normalization

The labor market in 2024 presented a mixed picture. It was a great market if you had a job, but perhaps not the best market if you were looking for one. Job creation numbers remained stable, with a three-month moving average above 150,000 jobs most months. However, the unemployment rate rose slightly, moving from the mid-3% range to around 4%.

Jesse Hardin highlighted how this shift reflects normalization: “The unemployment rate is now closer to pre-pandemic levels, and while job openings and the quits rate are down, this isn’t necessarily bad—it’s a sign of stability after years of disruption.”

Consumer Credit: Affordability Under Strain

Maria Urtubey discussed the increasing financial pressures on households. “Higher interest rates have led to increased borrowing costs. The average interest rate on credit card accounts with balances reached 23.4% in August, and revolving debt has surged to $1.2 trillion,” she explained. This has left many households turning to credit cards to meet basic needs.

Maria also noted the broader impact on consumers’ financial priorities: “Student loan payments resumed this year, and many households are reassessing their spending. However, we’ve seen consumer confidence increase, particularly among younger and middle-income groups. There’s cautious optimism, even amid challenges.”

Affordability: A Central Theme

Tom brought the discussion full circle by addressing affordability as a defining theme of the year. “Affordability touches everything—housing, groceries, transportation. It determines how capable consumers are of meeting their needs and saving for the future,” he explained.

Using housing as an example, Tom highlighted how higher mortgage rates impacted financial decisions. “Existing homeowners with mortgages below 4% are hesitant to sell and take on a 7% rate for a new home. This creates a bottleneck in the housing market and affects wealth accumulation,” he said.

Reflecting on the broader implications, Tom added, “Affordability is a concern for everyone, whether they’re buying a carton of eggs or a new home. It’s an issue that transcends income levels and credit scores.”

A Look Ahead to 2025

The episode concluded with a lightning round revisiting the panel’s 2024 predictions recorded at the beginning of the year. Some, like Tom’s forecast of AI’s transformative role in finance, proved spot on. “AI has moved beyond customer service into areas like fraud detection, investment strategies, and risk management,” he noted.

Others, such as Maria’s prediction of rising student loan delinquencies, remained works in progress due to delays in reporting. Reflecting on his own predictions, Dave joked, “I couldn’t be wrong again for next year,” before acknowledging that some trends, like regulatory action on buy-now-pay-later services, were slower to materialize.

From all of us on the Equifax Advisory Team, we wish you a safe and happy holiday season.

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*The opinions, estimates, and forecasts presented herein are for general information use only. This material is based upon information that we consider to be reliable, but we do not represent that it is accurate or complete. No person should consider distribution of this material as making any representation or warranty with respect to such material and should not rely upon it as such. Equifax does not assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice. The opinions, estimates, forecasts, and other views published herein represent the views of the presenters as of the date indicated and do not necessarily represent the views of Equifax or its management.