In 2024, the US economy experienced a rapid recovery from the COVID-19 lockdown slump, leading to a renewed sense of enthusiasm across the country. The Dow Jones Industrial Average reached all-time highs, closing at 37,903, while the Nasdaq composite also hit a high of 15,605. This positive performance in the US equity markets indicated that the economy was heading in the right direction.
The driving force behind the US economy in 2024 has been affluent Americans, rather than the middle-class segment. Affluent Americans who invested in government bonds received higher yields compared to others in the same year. This trend of affluent Americans driving the economy is likely causing the delay in rate cuts by the Fed.
Affluent Americans are benefiting from the rising value of homes, while the middle class is facing challenges. Their income is growing in various sectors such as government bonds, commodities, and the stock market. This trend has contributed to the “wealth effect,” where increasing home and stock values boost confidence and encourage higher spending, defying expectations of a sharp economic slowdown.
In contrast to their affluent counterparts, middle-class Americans have struggled with stagnant wages and limited access to healthcare. While they have made some gains in certain sectors such as manufacturing and construction, their overall financial situation remains precarious due to factors such as debt and inflation.
Despite these challenges for middle-class Americans, there has been some positive news on this front as well. The Biden administration’s proposed American Jobs Plan includes several measures aimed at creating jobs and improving infrastructure for workers across all segments of society. Additionally, many companies have started offering paid family leave benefits and other perks aimed at attracting and retaining talent from diverse backgrounds.
Overall, while affluent Americans continue to drive much of economic growth in 2024, it remains important for policymakers and businesses alike to address issues facing middle-class Americans if they want to ensure long-term stability and prosperity for everyone involved