Kerby Anderson
Most Americans are already financially worse-off than they were before the pandemic. But here is an arresting statistic. JP Morgan estimates that 99 percent of all Americans will be financially worse-off by next year.
The majority of Americans have burned through their excess savings they accumulated during the Covid-19 pandemic. The last few percentages of Americans will have used them up by July 2024.
The bank’s top stock strategist points to the fact that most Americans are already losing ground financially. He predicts that “only the top 1% of consumers by income will be better off than before the pandemic.” He also points to the increasing number of credit card and auto loan delinquencies, as well as Chapter 11 filings.
It appears that excess savings peaked in August 2021 at $2.1 trillion, which was boosted by the government stimulus checks. Now the savings have dwindled to below $148 billion. Consumers are facing tighter credit conditions and rising rates.
The graph that accompanies this commentary helps to explain the different reactions to the current economic conditions. On one side you have the president and his cabinet, along with many Wall Street pundits, talking about the positive economic news. They point to low unemployment figures and economic growth. They don’t understand why most Americans aren’t more excited.
On the other side are most Americans, who are the bottom 80% of income level. They are struggling financially and are already having a difficult time making ends meet. All this financial “happy-talk” hasn’t changed their financial circumstances and they find themselves financially worse-off.
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Penna Dexter