Yahoo Finance 6 Things the Middle Class Can Expect in 2024, According to Money Experts
If you’ve been following the news, you may have noticed that economic forecasts have been all over the place in the last year or so. Predictions have ranged from expectations of an unavoidable recession to positive news that we may indeed avoid a recession with well-timed rate hikes.
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Trying to understand what’s happening can be difficult if you’re in the middle class. This is why we contacted financial experts to gather predictions for what the middle class can expect in 2024.
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Challenges With Entering the Real Estate Market
“Unfortunately, the middle class will continue to face difficulty buying the homes they want,” said Brian Kuhn, CFP and SVP, financial advisor at Wealth Enhancement Group. “Prices are up on real estate and tend to stick unless a significant economic downturn comes with issues for the middle class.”
While there have been predictions of housing prices coming down, the issue is that they skyrocketed during the pandemic months, when the real estate market experienced frenzied buying and selling. As a result, many homes are far too expensive for those looking to enter the market.
Kuhn said, “Hope for lower mortgage interest rates might take longer than anticipated as the Federal Reserve might hold off on lowering rates as long as possible.”
In theory, the higher interest rates were supposed to cool down the economy, with the hope that real estate prices would come down eventually. In reality, real estate prices are still high, and becoming a property owner is still a fantasy to some.
While it would be foolish to attempt to predict the real estate market, the middle class likely will struggle to enter the space in 2024. All one can do is focus on saving up as much as possible to have a decent down payment.
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Strong Employment Options
“The employment market is very strong despite concerns about a slowing economy, with unemployment below 4%,” Kuhn said. “So middle-class households … likely have reasonable employment options to explore growing their careers and benefits.”
The good news for the middle class is that career opportunities are there if you want to switch jobs or try to get a raise. You can increase your income by switching jobs, as the resilient labor market has prevented the economy from entering an official recession.
Reduced Debt Payments
“If interest rates drop, as many economists are predicting and many central banks have suggested, the middle class can expect that the payments on their variable debt will go down,” said real estate expert Sebastian Jania. “This will allow them to have more monthly disposable income, which they can use to either pay off their debt or for other reasons.”
If interest rates do finally come down in 2024, those in the middle class can see their debt payments drop. This would lead us to the next point.
Increased Savings
“Consumers are hoping interest rates will come down in the months ahead and that price increases on everyday goods and services will ease as inflation declines,” said Brian Severin, senior executive vice president and chief marketing officer at Mutual of America. “Should this happen, it could help individuals to strike a better balance in 2024 between paying off current expenses and saving for their future, which is huge, considering Americans generally have been putting less money into their long-term savings over the past few years.”
If interest rates come down and middle-class people are spending less on debt payments, then they’ll be able to put money away into their savings and retirement accounts to prepare for the future. Increased savings also could lead to the reintroduction of luxuries such as travel and self-care spending.
Uncertainty in the Stock Market
“The financial markets made a strong recovery in 2023 after steep declines in 2022,” Severin said, “however, the year ahead is filled with uncertainty.”
The stock market reacts to inflation data and interest rate decisions from the Fed. This means that most announcements about interest rates in 2024 could potentially lead to market swings in either direction.
“Middle-class consumers are still dealing with the impact of inflation on their budgets, millions of younger Americans are paying student loans again, and interest rates on credit card purchases and home mortgages have jumped significantly,” Severin said. “That’s why it’s so important to stay focused on long-term financial goals and to ignore short-term market volatility when saving for the future. Continuing to regularly contribute to your retirement account in 2024, rather than panicking if stocks tumble or trying to time the market, is a much sounder approach to build savings over time.”
More Side Hustles
One general sentiment that most money experts can agree on is that inflation has made life more expensive than ever. While there’s optimism about interest rates coming down this year, there’s no simple solution to dealing with inflation and the increased prices of goods and services in the economy.
This is why many Americans have turned to side hustles to bring in some extra money to help cover the bills. It doesn’t look like side hustles and finding additional income streams will disappear in 2024.
Closing Thoughts
The middle class could experience some significant financial changes in 2024 based on how the last few years have gone. Based on expert predictions, there could be some long-awaited positive changes and some negative aspects that regular people will have to deal with in the next year.
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This article originally appeared on GOBankingRates.com: 6 Things the Middle Class Can Expect in 2024, According to Money Experts
