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Macroeconomic Monitor October 2024 – The World After Rate Cuts: Declining Consumer Confidence and Disruptions in Middle-Class Spending

23 October 2024

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  • Globally, United States consumer confidence weakened significantly to pessimistic region in September 2024, with the Consumer Confidence Index falling to 98.7 from 105.6 in August 2024, marking the largest drop since August 2021. Concerns about job security, reduced hours, and fewer job openings contributed to the decline. Meanwhile, US Purchasing Manager’s Index indicates a third consecutive month of manufacturing sector deterioration and the sharpest decline since June 2023. US inflation rose more than projected in September 2024, surpassing analysts’ projections that had predicted a further slowdown in inflation.
  • Major economies like France and Germany saw worsening sentiment, while Poland, Spain, and Italy experienced notable improvements. Industry confidence fell due to weaker assessments of order books and export demand, while consumer confidence improved, driven by optimism about household finances. The Eurozone’s manufacturing sector deepened its contraction, with the HCOB Eurozone Manufacturing PMI falling to 45.0 in September 2024 from 45.8 in August 2024, marking its lowest level in 2024.
  • China’s economic expansion slowed in the third quarter of 2024 despite tentative signs of improvement. China’s disinflation problem is getting worse along with the weak consumer price index or inflation and factory-level prices in the September 2024 period. Moreover, China’s manufacturing sector experienced a notable decline, as indicated by the Purchasing Managers’ Index (PMI), which fell to 49.3 from 50.4 in August, signalling contraction after a brief recovery.
  • In Indonesia, the income of upper middle-class households has recovered above pre-pandemic levels, while lower class households have not recovered to pre-pandemic levels. This condition is partly due to the structure of the Indonesian workforce, which is still dominated by informal workers reaching 59%, with a recovery rate that has not returned to pre-pandemic conditions. Moreover, the middle class has not played a major role in state tax revenues. In percentage terms, the middle class only contributes 1% to tax revenues. Ideally, in developed countries, individual tax payments are the mainstay of state tax revenues.

23 October 2024

Macroeconomic Monitor October 2024 – The World After Rate Cuts: Declining Consumer Confidence and Disruptions in Middle-Class Spending

Penulis :

Ibrahim Kholilul Rohman, Mohammad Alvin Prabowosunu, Ariel Bhaskara