BLOOMBERG: The Economy Boomed In 2024, But It's Starting To Crack...
Published: 2025-01-02
Status:
Available
|
Analyzed
Published: 2025-01-02
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
The US economy performed better than expected in 2024, overcoming challenges like interest rates and election uncertainty.
"The United States economy surprised again in 2024 despite the fed and election drama."
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Consumer spending remained strong in 2024, even among those without disposable income.
"Americans keep spending money even if they don't have money to spend."
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Consumers have largely depleted pandemic-era savings and are saving less from their current incomes.
"Americans have mostly exhausted their pandemic savings and have generally been putting aside a smaller share of their incomes every month."
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Wealthy individuals are increasing their spending due to the growth in asset prices (stocks, real estate).
"Wealthy people are able to spend more money because their asset prices have boomed."
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Lower-income Americans are relying on credit cards and other forms of debt to maintain their spending levels.
"Lower income Americans are spending more money through the help of credit card debt and other forms of credit."
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From 2019 to 2024, US household income increased by 20%, while inflation rose by approximately 23%, indicating a real income decrease.
"Between the 5 years of 2019 to 2024 we saw household income in America Rise by 20% over the same time period reported inflation was around 23%."
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Credit card debt in the US has increased by roughly 26% as consumers increasingly use credit to finance their expenditures.
"Credit card debt in America has gone up by around 26% because more people are having to turn to credit cards to fund their spending."
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The stock market grew by over 80% between 2019 and 2024, leading to increased wealth and spending for investors.
"The stock market Rise by more than 80% over those same 5 years which means people that are investors got a windfall they became wealthier they were able to spend more money."
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There is a growing disparity in how and why Americans are continuing to spend, with different income groups behaving differently.
"We're seeing a Divergence in how Americans keep spending money and why the spending is continuing so strongly in the United States."
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There has been a decrease in hiring and an increase in unemployment.
"Hiring has come down while unemployment has gone up."
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Hiring slowed down throughout 2024, and the unemployment rate increased, signaling a potential recession indicator.
"Hiring decelerated throughout the year and the unemployment rate edged higher triggering a popular recession indicator."
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The US unemployment rate rose from 3.7% in January 2024 to 4.2% by the time of this recording in early 2025.
"Back in January of 2024 12 months ago we had an unemployment rate in the United States of 3.7% as of today at the time we recording this video what we know is that the unemployment rate has jumped up to 4.2%."
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The number of unemployed individuals in the US increased by nearly one million from the start to the end of 2024.
"We have almost 1 million more unemployed people at the end of 2024 than we did at the beginning of 2024."
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There is an expectation for unemployment to continue rising.
"A lot of people are expecting unemployment to go up even more."
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The Federal Reserve initiated interest rate cuts in 2024 with the aim of boosting the job market.
"The Federal Reserve Bank begun cutting interest rates in 2024 to stimulate the job market."
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Efforts to reach the Federal Reserve's 2% inflation target have stagnated in late 2024, after a significant decrease in 2023.
"Progress towards the central bank's 2% inflation target has stalled in recent months following a swift decline in 2023."
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Inflation increased on a month-over-month basis during the final months of 2024, rather than continuing its decline.
"For the last few months of 2024 inflation didn't fall but it kept Rising month after month after month inflation went up."
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The Federal Reserve anticipates a more challenging battle to reduce inflation to the target of 2%.
"We might have a little bit of a tougher fight of bringing inflation down to the 2% level."
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The Federal Reserve faces a dilemma in 2025: whether to prioritize stimulating the job market or combating inflation.
"Do they want to continue stimulating the job market or are they going to want to continue fting inflation?"
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The Federal Reserve has indicated a less aggressive approach to interest rate cuts in 2025.
"The FED has kind of hinted is that they don't want to be as aggressive with interest rate Cuts in 2025."
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Mortgage rates, after reaching a two-year low in September, are climbing back towards 7% due to expectations of delayed Federal Reserve interest rate cuts.
"Mortgage rates which fell to a 2-year low in September have been approaching 7% again on expectations that the FED will take longer to cut interest rates."
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There is concern that mortgage rates will not decrease significantly in 2025, particularly if the Federal Reserve adopts a less aggressive stance on interest rate cuts.
"The concern is that mortgage rates are not going to fall as aggressively in 2025 especially if the Federal Reserve Bank is not going to be as aggressive with cutting interest rates."
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Increased housing inventory is anticipated in 2025.
"It looks like we will hopefully see more inventory on the housing market in 2025."
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A substantial decrease in mortgage rates is not expected; they might settle around 6%.
"It doesn't look like we're going to see a big drop in mortgage rates maybe they'll come down to around 6%."
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A slowdown in asset price appreciation could lead to reduced consumer spending, negatively impacting the economy.
"If we start to see a Slowdown in asset price growth we could also see a Slowdown in spending and that could impact the economy."
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Fewer interest rate cuts are predicted for 2025 due to ongoing concerns about inflation.
"Expect less interest rate Cuts in 2025 because apparently inflation is still a problem."
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