Despite a decline in inflation rates, just close to half of Americans are optimistic about the economy in 2024.
A new market perceptions study from Allianz Life, which surveyed 1,005 consumers, finds that less than half (47%) of Americans say the economy will improve in 2024—a decrease in hopefulness compared to this same time in 2020 (66%).
Investor sentiment surrounding the market and interest rates could be the reason for the lack of buoyancy, as 74% of Americans believe the market will be “very volatile” in 2024, while 77% say interest rates will continue to climb this year.
The effect of inflation on interest rates is causing more Americans to move their money out from the market and into high-yield savings accounts or money market funds, finds Allianz Life. Overall, 55% say they are keeping their money in such accounts to avoid interest rates. This was even more notable among Millennial workers, as 65% are adding savings to high-yield accounts to evade high interest rates.
On the other hand, market confidence is so low that a sizable number of Americans (61%) would rather have physical cash than endure volatile markets.
“High interest rates in savings accounts or money market accounts can be enticing,” says Kelly LaVigne, vice president of Consumer Insights at 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.”
Others point to the rising cost-of-living in the U.S., as 67% say that prices are still too high. Moreover, these individuals have struggled to stay afloat with their finances in the past three months.
As a result, more Americans are looking for guidance among financial professionals, with 74% saying they would stop working with their current advisor if they did not help manage their ongoing inflation concerns.
SEE ALSO:
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- Investors Are Optimistically Numb to the Market
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
