Consumer Says: Economic sentiment in 2024

What's new in the economy?

• Labor market data surprises to the upside: Bureau of Labor Statistics released the final 2024 Employment Situation Report on January 10, 2025. The unemployment rate came in lower than the market expectations at 4.1%, in line with the Morning Consult Unemployment Index. As we enter the new year, the labor market is in a solid state– For those who have had a job in 2024, it was less likely for them to lose their jobs. On the other hand, for those who were searching for a job, it has been harder - and taken  them longer- to find a job. 
• With better than expected labor news, already paired down interest rate cut projections have been postponed out. The Federal Reserve has a dual mandate of price stability and full employment. The Fed’s focus for most of 2022 and 2023 has been on bringing inflation down but last year, especially the second half of the year, the focus shifted more towards the labor market as incoming data painted a cooler picture. While good news on the labor front is very much welcome by the Fed, some committee members have already voiced concerns about rising inflation risks.
• … which brings us to the latest price related data releases, producer price index and consumer price index. The latter was released yesterday morning and brought on some additional good news as the growth rate came in below expectations. Some producer price indexes, such as air transportation, are expected to boost the PCE, but overall the markets responded positively to the news. Another welcome news: the core consumer price index this morning. While the topline CPI figure matched the expectation of 2.9%- still climbing relative to September- but the core measure came in lower than the consensus forecast. The core measure strips out the volatile aspects of the consumer price index, a more moderate increase is not only welcome by consumers but also the markets.

Consumer says...

What does our daily consumer sentiment index say about the economy in the U.S. but also in more than 40 countries?

U.S. Consumer sentiment is on the rise. Especially after the presidential election in the U.S. consumer sentiment ticked up. At the same time, sentiment for Democrats and Republicans swapped, with Republicans becoming more optimistic and Democrats more pessimistic. As a reminder:  Morning Consult’s Index of Consumer Sentiment replicates the University of Michigan Index with three questions that are forward looking and two that measure current conditions. This composition contributes to recent Republican consumer sentiment growth and simultaneously Democratic consumer sentiment declines as both constituents look out to 2025 and beyond.

Looking at global sentiment…  More countries (25) have seen their sentiment rise in 2024 as opposed to fall (18) over the course of 2024. For our recent analysis, we compared the average for January 2024 against December 2024. This not only allowed us to understand the changes over the year but also where each country would begin in 2025. Each country has a unique reason why sentiment evolved the way it did over the course of the year, but we focused on last year’s biggest “winners” and “losers.” For more on other countries, check out our memo on 2024 global consumer sentiment and stay up to date on all 43 countries with our monthly tracker.

The biggest loser, Brazil: Although Brazilian consumer sentiment had dropped in the first quarter, it was the large drop in the final weeks of December that made them the biggest loser. The deterioration in sentiment is mostly tied to investor backlash to fiscal deficit, which was followed by the plummeting Brazilian Real and its central bank raising interest rates by 100 basis points. Brazilian sentiment ended the year at a fresh low, which was last seen June 2022.

The biggest winner, Argentina: Although Argentina’s economic woes are not over, its consumer sentiment soared in 2024, moving from an average score of 83.1 in January to 108.8 in December. President Milei remains one of the most popular leaders among the 25 tracked by Morning Consult. His popularity rose in the fourth quarter, paralleling the steeper increase seen in the topline consumer sentiment index. The healthy growth in both indexes reflect not only the third quarter’s positive GDP growth but also the positive outlook for 2025 as Argentina leaves its recession behind as inflation has cooled considerably from its heights.

Further reading: 

• Political Risk Ratings, January 2025: Take a look at a report by our political intelligence colleagues who provide a monthly update on global political risk ratings using Morning Consult’s daily proprietary data.
• Latest installment of our tariff analysis exploring opposition to tariffs with the backdrop of price sensitivity to higher prices.
• Most recent webinar on 2025 trends by Morning Consult.