All into Account: Pandemic savings cushion downshifting as cost of living rises

In this episode, we take a closer look at the health of the US consumer and household savings and cash balances. We highlight the risk that US households are reaching an inflection point as consumer confidence is on the decline, while year-ahead inflation remains stubbornly high at 7%. Although US household savings are likely to remain positive through the end of next year, our US economists see that the $2.1trn of excess savings relative to the pre-pandemic trend could be used up by the second half of next year. Excess savings supported US discretionary consumer spending and the JPMorgan Chase Institute finds that elevated cash balances during COVID have provided a cushion for spending and that for all income quartiles, real incomes are higher in 2022 than in 2019. More than two-thirds of respondents in our US equity retail cost of living survey expect to see their monthly core cost of living to rise by at least 10% in the coming months relative to costs of living at the start of the year.

 

Joyce Chang, Chair of Global Research

Chris Wheat, President of the JPMorgan Chase Institute

Daniel Silver, Senior US Economist

Matthew Boss, Head of J.P. Morgan’s Retail Equity Research