Overall, when accounting for inflation, there was 5% to 15% more cash in U.S. bank accounts than in 2019.
Exception: The wealthiest Americans have less money in the bank than they did a year ago. Many people continue to spend, especially on travel and entertainment, or move cash out of traditional checking and savings accounts and into other investments, such as certificate of deposit accounts. To take advantage of rising interest rates.
“People are trying to understand how they feel about the economy,” said Chris Wheat, director of the JPMorgan Chase Research Institute. “On average, families tend to see their spending slow down below historical income and expenditure levels. What we're seeing is a plateau in spending.”
From January to October 2023, bank account balances remained roughly flat across all racial and ethnic groups, according to the analysis. Overall, as of October 2023, bank balances for Asian households were approximately 13% higher than in 2019, and balances for black, white, and Hispanic households were approximately 11% higher.
National spending data shows that households are gradually cutting back on a variety of expenses, including childcare, sporting events, mobile phone service and international travel. Overall, monthly spending growth slowed to 0.2% in November from 0.7% in September, according to the Bureau of Labor Statistics.
Zach McKinney, a marine engineer in Seattle, says his spending habits have changed dramatically in recent years. Since 2020, he and his wife have had two children, moved to a more expensive house and bought a bigger car.
But they also get significant raises in total 25 to 30 percent — that helped offset both inflation and new costs. As life settled down post-pandemic, they found a new balance between spending and saving. McKinney said that even after taking into account high child care costs, overall household finances are in better shape than they were before the pandemic, and that this is a “temporary bump” that can be overcome once children start attending public school. He says he thinks so.
“We're not saving any money, and a lot of it goes to raising children,” McKinney said. “But our day-to-day expenses don't feel all that different than before. We've found ways to make it more manageable.”
The personal savings rate (the percentage of monthly income that families save) has fluctuated widely since the pandemic began, going from 32% in April 2020 to 2.7% in June 2022, according to data from the Bureau of Economic Analysis. . In recent months, it has calmed down to: about 4 percentThis 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.
These changing patterns are also impacting business. At his Tulsa streetwear shop, Silhouette Sneakers & Art, owner Benita Cooper says sales are clearly down as people rethink their spending habits. At the beginning of the pandemic, armed with extra savings and stimulus checks, many shoppers were willing to spend hundreds of dollars on rare sneakers. But now that money is gone, people are starting to retreat due to inflation.
“Our sales numbers have definitely gone down, and even the holidays are later than they used to be,” she said. “Here in Tulsa, there are signs all around me that spending is down. People are eating out less, shopping less, and adjusting their habits. It certainly feels that way.”
