JPMorgan Chase claims that 99% of Americans have already exhausted the excess savings they accumulated during the COVID-19 pandemic. 

As conveyed by the bank's top stock strategist Marko Kolanovic, this outlook is rather bleak, saying that in the forthcoming months, nearly everyone in the United States will be worse off financially compared to what they were in 2019, Business Insider reported.

Kolanovic noted that 80% of consumers, constituting almost two-thirds of total consumption, have already dissipated any financial cushion they might have built during the lockdowns. 

(Photo : Mohamed Hassan from Pixabay)

Gloomy Outlook of JPMorgan Chase

The outlook is gloomy, with only the top 1% of income earners anticipated to fare better than their pre-pandemic financial status. Kolanovic pointed to troubling indicators such as increasing credit card and auto loan delinquencies and a surge in Chapter 11 filings.

An illustrative chart projected that by June 2024, every income group, excluding the top 1%, is seen to decrease below their March 2020 levels of inflation-adjusted liquid assets through deposits and money market funds.

JPMorgan had previously projected that surplus savings peaked at $2.1 trillion in August 2021, magnified by government stimulus checks. However, this amount has dwindled significantly to below $148 billion as of October.

As JPMorgan strategists noted at the time, consumers grappled with various challenges, including tightening credit conditions, rising interest rates, the phase-out of pandemic-related stimulus programs, diminishing excess savings, and persistent above-average inflation.

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Difficulties Faced by Elder Millennials

A recent observation by Bank of America underscored the particular difficulties elder millennials face. This demographic, born in the 1980s, has weathered the storm of the 2008 financial crisis and the pandemic during crucial phases of their working lives.

JPMorgan Chase, however, noted that, at least for now, there is little indication of systemic weakness in the housing market.

While residential mortgages show no significant delinquencies as consumers secured low-interest rates, existing home sales have plummeted to near-record lows, and a substantial overhang of approximately $6.5 trillion in commercial real estate debt looms large in the market, according to Kolanovic. 

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