On the whole, U.S. bank accounts had between 5 and 15 percent more cash in the bank than they did 2019, after accounting for inflation.
The exception: The wealthiest Americans, who have less socked away in the bank than they did a year ago. Many are continuing to spend, particularly on travel and entertainment, or are moving their cash out of traditional checking and savings accounts to other investments, such as certificate of deposit accounts, to take advantage of rising interest rates.
“People are trying to figure out: How am I feeling about the economy?” said Chris Wheat, president of the JPMorgan Chase Institute. “On average, families are showing a tendency to slow down on spending when they go below historical balance levels. That’s what we’re seeing, a flattening in spending.”
Bank account balances remained largely level across all racial and ethnic groups between January and October 2023, the analysis found. Overall, Asian households had about 13 percent more money in the bank in October 2023 than they did in 2019, while balances for Black, White and Hispanic households were about 11 percent higher.
National spending data shows that households are slowly pulling back on a range of expenses, including child care, sporting events, cellphone service and international travel. Overall, monthly spending growth decelerated from 0.7 percent in September to 0.2 percent in November, according to the Bureau of Labor Statistics.
Zach McKinney, a marine engineer in Seattle, says his spending habits have changed dramatically in the last few years. Since 2020, he and his wife have had two children, moved to a pricier house and bought a bigger car.
But they have also gotten large raises — totaling 25 to 30 percent — that have helped offset both inflation and new costs. As life has settled after the pandemic, they have found a new balance between spending and saving. McKinney says their overall finances are in better shape than they were pre-pandemic, even accounting for high day-care costs, which they consider a “temporary hump” they will overcome once their children start public school.
“We aren’t saving very much at all — a lot of that is getting eaten up by child care,” McKinney said. “But our day-to-day expenses don’t feel that different than they did before. We’ve found a way to make it manageable.”
The personal savings rate — or the share of monthly income that families set aside — has fluctuated wildly since the start of the pandemic, going from 32 percent in April 2020 to 2.7 percent in June 2022, according to data from the Bureau of Economic Analysis. In recent months, it has settled at about 4 percent, which means Americans are generally saving less than they were before the pandemic, but more than they were in 2022, when inflation was at its peak.
Those changing patterns are trickling down to businesses. At Silhouette Sneakers & Art, a streetwear shop in Tulsa, owner Venita Cooper says there has been a definite drop-off in sales as people recalibrate their spending habits. Early in the pandemic, armed with extra savings and stimulus checks, many shoppers were happy to spend hundreds on rare sneakers. But as that money has run out — and inflation has taken its toll — people are pulling back.
“Our sales numbers are definitely down, and even the holidays were slower than they have been,” she said. “There are signs all around me here in Tulsa that spending is down — people are eating out less, they’re shopping less, they’re correcting their habits. I definitely feel it.”
Read More:Americans’ bank accounts are stabilizing after inflation shock
2024-01-25 13:41:45
