In recent news, JPMorgan has delivered a sobering assessment of the financial situation for most Americans. Most people have used the extra savings they accumulated during the COVID-19 pandemic. According to the bank, by mid-2024, it’s expected that nearly everyone, except the top 1% of income earners, will find themselves in a worse financial position than they were in 2019.
This alarming prediction comes from Marko Kolanovic, JPMorgan’s top stock strategist, who points out that 80% of consumers, comprising a substantial portion of the population and driving a significant portion of consumption, have already spent their savings cushions from the lockdown period. Signs of financial distress are emerging, such as credit card and auto loan delinquencies, as well as Chapter 11 filings.
The chart accompanying this report illustrates that, by June 2024, nearly all income groups, except the top 1%, will have lower inflation-adjusted liquid assets compared to March 2020 levels. JPMorgan’s data reveals that the excess savings peaked in August 2021 due to government stimulus checks have significantly dwindled.
Adding to the situation’s complexity, Bank of America noted that elder millennials, born in the 1980s, face particularly tough economic challenges. They’ve had to navigate both the 2008 financial crisis and the pandemic during crucial years of their careers. With mounting childcare costs and persistent inflation, many of them are finding it difficult to own homes, save for retirement, and maintain their spending within their means……….[read more]
How might these financial challenges for most Americans impact the broader economy, businesses, and investments over the next few years?
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