Economic Perspectives: Consumers Start to Expect Lower Interest Rates
The University of Michigan publishes a monthly Survey of Consumers that assesses the confidence and expectations of U.S. consumers. It asks questions about current economic conditions, expectations for the future, and consumers' attitudes toward making big purchases. There was a notable development in the December 2023 survey, as the percentage of consumers expecting lower interest rates over the next 12 months rose to nearly 30% from 12% the prior month. This expectation for lower interest rates is connected to easing inflation and the view that there is no need to keep interest rates at current levels with inflation falling back to 2%. Consumers and investors both expect rate cuts in the first half of 2024, and the Federal Reserve is hinting at the potential for rate cuts if inflation continues to ease this year.
