Economics
How Consumers Are Responding to Interest Rate Cuts
Report summary
In September 2024, the Federal Reserve began reducing its benchmark interest rate. Since then, many consumer rates have modestly decreased, but mortgage rates have increased. Over 60% of consumers say interest rates are too high, down from before the rate cuts. Most of these consumers say that high rates have affected their household finances, particularly millennials. Consumers report they were most likely to reduce their spending on nonessentials due to higher rates. Decreased rates have gone largely unnoticed by consumers, as most of them are not aware of recent interest rate cuts by the Fed.
Key Takeaways
- The Fed has cut its benchmark interest rate by 1 percentage point since September – most consumer rates have declined modestly since then, but mortgage rates are even more elevated.
- Most consumers believe that rates remain too high and say high rates affect their household finances, prompting them to reduce discretionary spending.
- Decreased rates have gone largely unnoticed by consumers, as most of them are not aware of recent developments from the Fed.
Data Downloads
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Methodology
Morning Consult data featured in this report draws primarily from a survey conducted December 19 – December 22, 2024 among a sample of 2,200 adults. The interviews were conducted online and the data were weighted to approximate a target sample of adults based on age, gender, race, educational attainment, region, gender by age, and race by educational attainment. Results from the full survey have a margin of error of plus or minus 2 percentage points.
Also included in this report is data from Morning Consult’s U.S. Consumer Spending Tracker, which has data available to download.
About the author
Sofia Baig is an economist at decision intelligence company Morning Consult, where she works on descriptive and predictive analysis that leverages Morning Consult’s proprietary high-frequency data. Previously, she worked for the Federal Reserve Board as a quantitative analyst, focusing on topics related to monetary policy and bank stress testing. She received a bachelor’s degree in economics from Pomona College and a master’s degree in mathematics and statistics from Georgetown University.
Follow her on Twitter @_SofiaBaig_For speaking opportunities and booking requests, please email [email protected]
