Respond to prefers-color-scheme dark in app web views

Follow section front redirects in Spectrum

Enable NLP source in PCS for load testing

Switch off the News Alerts Survey Widget when we have enough responses

Poll to determine if new LUF updates are available

Allows the winning A/B test variant to be turned on without Spectrum deployment

Show infinite scrolling sections in Assembler MultiView

Show option for NLP article summaries in Action Bar

A general feature flag for Recipe Features that aren't yet released

Feature flag for media team features that aren't yet released

Use new Orca video player for preroll plugin in Spectrum

Show the snow tracker (instead of the heat tracker) on Spectrum

The New York Times, alone in its outrage over access to Biden

The ‘Access Hollywood’ video cemented Trump’s air of invincibility

Stephen A. Smith would like even more of your attention

Ask Amy: I live with my boyfriend – and his sister and her family

Carolyn Hax: Working for a celebrity has this employee feeling ‘small’

Carolyn Hax: Longtime friend won’t forgive being last-minute canceled for a guy

In photos: The 150th running of the Kentucky Derby

Bodies found in Mexico where 3 tourists went missing

Protesters clash with law enforcement at U-Va.

A frank look at hot dog prices at MLB ballparks

Sloppy first inning dooms the Nationals in a 6-3 loss to the Blue Jays

In a pinch, the Nationals finally find some offense

Strangers help Sesame Street puppeteer after heirloom necklace was stolen

Teen grabs wheel when driver passes out and school bus veers into traffic

Cat climbed into Amazon return box, found alive 630 miles away

How Pope Francis opened the Vatican to transgender sex workers

Israel shuts down Al Jazeera’s operations, raids Jerusalem office

Hamas attacks border crossing, killing 3, as Gaza cease-fire talks drag on

There’s still time for Congress to Trump-proof the Insurrection Act 

The Post endorses April McClain Delaney and Tom Royals for Maryland’s 6th District

On Press Freedom Day, little to celebrate for Hong Kong’s journalists

The new cure-all for vacation excess: the IV drip 

What’s the best bus to New York? We tested 5 for comfort and value.

You asked: Do I need a passport for my cruise?

Twitch streamers become go-to news source for campus protest coverage

After years of delay, Boeing to try again with Starliner space capsule

Divided Trump campaign weighs joining TikTok, the app he tried to ban

Top RNC lawyer resigns after rift grows with Trump

Trump escalates attacks on prosecutors, says Democrats run ‘a Gestapo administration’

WAUKESHA, WI - MAY 1st: Former president Donald Trump speaks at a campaign rally on Wednesday May 1st, 2024.  (Photo by Sara Stathas for the Washington Post)

Shuran Huang

Despite a year when inflation pushed prices to new heights, Americans are still better off now than before the pandemic, with nearly 10 to 15 percent more in their bank accounts than in 2019, new checking and savings account data shows.

However, households are rapidly spending down that extra cash they’d socked away during the pandemic. Median account balances are at their lowest levels in roughly three years and have dropped as much as 41 percent from their peak in April 2021, when Americans were flush with government stimulus money and tax returns, according to a <a href="https://www.jpmorganchase.com/institute/research/household-income-spending/household-pulse-cash-balances-through-March-2023" target=_blank>JPMorgan Chase Institute analysis</a> of the bank accounts of 9 million Chase customers.

Taken together, the data helps explain the big mystery behind how the U.S. economy has managed to avoid a recession that many economists had forecast: Consumers, supported by a strong labor market, have been able to keep spending despite inflation and a sharp rise in borrowing costs.

But it also highlights why Americans remain tentative about their economic prospects, particularly as they face higher prices on food, housing and travel. Many have been working through their savings and say their bank account balances are on a downhill trajectory, with little prospect of building them back up to where they were a year or two ago.

There’s a widening spending gap between retirees and younger adults

“Obviously there was a huge public health event and unprecedented federal response that landed a lot of money in peoples’ bank accounts,” said Chris Wheat, president of the JPMorgan Chase Institute, a think tank within the country’s largest bank. “From the perspective of an individual household, 2020 is getting farther in the rearview mirror, but you still remember what it was like to have a bigger balance. That feeling of ‘I have less’ has certainly intensified, in part because of inflation.”

The U.S. economy continues to defy the experts. Even as policymakers hiked interest rates, cooling down many sectors and triggering layoffs across housing, finance and tech, a resilient job market and healthy spending by households and businesses have worked to lift growth beyond what economists had expected at the start of the year.

Americans are far more optimistic, after more than a year of feeling particularly downbeat about inflation and giving the Biden administration low marks for its handling of the economy. Consumer sentiment <a href="http://www.sca.isr.umich.edu/" target=_blank>spiked in July </a>to its highest level in more than a year and a half, according to a closely-watched metric from the University of Michigan.

“Consumers have absolutely noticed that inflation has slowed down,” said Joanne Hsu, director and chief economist of University of Michigan Surveys of Consumers. “The labor market is still strong, incomes are high, and that’s helped support robust consumer spending.”

Inflation drops to lowest levels since March 2021 as economy cools

For many Americans, that means bank accounts are more flush than usual. Tony Oxx, a manager at a transportation company in Louisville, has nearly tripled his savings since the pandemic took hold. He’s gotten two raises in that period and his overall pay, including commission and bonuses, has jumped more than 50 percent.

“I’ve been able to really rake it in,” Oxx, 39, said, adding that he recently upped his 401(k) retirement contributions to 15 percent from 3 percent of his salary. “As far as inflation, I’ve seen some price increases but nothing that hurt too bad. I’m saving a substantial portion — about 25 percent — of what I take home.”

He’s also splurging more. Oxx and his girlfriend just returned from a week-long vacation in Cancún, and he recently paid for an all-inclusive cruise for their parents.

“I’ve never made this much money before,” he said. “This is the first time I’ve been able to pay for my mom to take a whole vacation.”

Although inflation has often overshadowed pay increases in the past year, that’s beginning to change: Earnings have grown faster than inflation for four straight months. Overall, average hourly wages are up <a href="https://www.bls.gov/news.release/pdf/realer.pdf" target=_blank>4.4 percent</a> in the past year, compared with a 3 percent increase in prices in the same period, according to data from the Bureau of Labor Statistics.

Employers add 209,000 jobs in June, a slow but steady gain

Nikki Cimino, 40, a public-sector recruiter near Denver, has been steadily working through her savings during the pandemic. Between a divorce and a hurried condo purchase after being priced out of her rental, she said the last three years have led to a pile of large expenses.

But this month, Cimino got a substantial raise. Her salary, at $65,000, is 30 percent higher than it was before the pandemic. She finally has a financial cushion and is traveling next month, to Myrtle Beach, S.C., with friends.

“It feels life-changing,” she said. “I can actually go on vacation without having to watch every single penny coming out of my checking account.”

The whirlwind events of the past three years — global pandemic, massive government stimulus and decades-high inflation — have had a discernible impact on Americans’ finances. Many bank accounts ballooned early in the pandemic, when people were stuck at home and received stimulus checks, then receded quickly as inflation and “revenge” spending on vacations, dining out and other services, took their toll.

But researchers say households are beginning to settle back into pre-pandemic spending and saving patterns. In the decade between the Great Recession and the pandemic, bank accounts were “very consistent,” said Wheat of the JPMorgan Chase Institute. “There was a lot of stability — and that’s the pattern we’re starting to see again.”

The highest-income households had about 27 days’ worth of extra cash in their accounts in the decade before the pandemic. That cushion spiked to 43 days in 2021, but has since settled at 35 days, according to <a href="https://www.jpmorganchase.com/institute/research/household-income-spending/household-cash-buffer-management-from-the-great-recession-through-covid-19" target=_blank>JPMorgan Chase Institute data</a> through March 2023. It’s a similar trend across the economy, though the lowest-income households had a substantially smaller buffer: about 13 days before the pandemic, 22 days at the height of stimulus and 16 days now.

Although the basic trajectory — a run-up in balances, followed by steady declines — holds across income groups and race, wide inequities have persisted and in some cases, worsened.

Black and Hispanic households saw the biggest jumps in savings and checking accounts early in the pandemic, as government stimulus money, child tax credit payments and extra unemployment benefits helped lift balances by 96 percent between January 2020 and April 2021, according to JPMorgan Chase Institute data. That’s compared with an increase of about 75 percent for White and Asian households.

Black women are finding better jobs than ever. A recession could reverse that.

Although temporary federal programs helped narrow a long-standing racial gap, those gains have since been wiped out. Black and Hispanic households spent down pandemic-era gains at a faster pace than their White and Asian counterparts, “leaving a larger range separating racial groups as of the end of 2022 compared to the average over the 2010s,” researchers found.

“If there had been any closing of a liquid wealth gap in the 12 to 18 months at the beginning of the pandemic, it seems to have largely gone away,” Wheat said.

Economists warn that racial and income inequities could worsen if the economy turns. <a href="https://www.washingtonpost.com/business/2023/07/03/black-women-full-employment/" target=_blank>The Black unemployment rate </a>— which fell to an all-time low in April — rose last month, even as overall joblessness fell. And there are signs that a cooling labor market is leading to reduced hours, particularly in low-paying service jobs. The number of people working part time for reasons beyond their control rose by 452,000 in June, the biggest jump in more than three years.

Businesses are cutting workers’ hours in a warning sign for the economy

Amber Brandon, 24, a cashier in Charlotte, was feeling good about her finances, until recently. She was making $15.60 an hour and was able to save $100 to $200 each week.

But the wholesale grocery chain, where she works, has begun slashing workers’ hours, which means Brandon’s schedule has gone from 24 hours a week to as few as eight. She’s having to dip into her savings to cover basics and has stopped shopping for clothes, snacks and other small luxuries.

“My paycheck’s gone from $500 to $120 a week,” said Brandon, who lives with her parents. “I was trying to get back to school, trying to finish up my college degree, but I’ve had to put that on hold. I’m still hopeful, but things definitely feel different.”

Gerald Loeb Award, Beat Reporting, 2021

Northwestern University, Medill School of Journalism

Abha Bhattarai is the economics correspondent for The Washington Post. She previously covered retail for the publication.

Abha Bhattarai

washpost

Americans are better off than before the pandemic, bank account balances remain higher

the-washington-post

COVID Precautions in Washington, DC

For The Washington Post

Shuran Huang for The Washington Post

name

prism://prism.query/site,/business/economy&limit=20

Economy

prism://prism.query/site-articles-only,/business&limit=20

Get a curated selection of 10 of our best stories in your inbox every weekend.

Business

The source for business news and analysis. Covering economic policy, business policy, financial news, economic issues, stock market data, local business, technology and more.