What Data From 9 Million Bank Accounts Tells Us About The State Of The US Economy

The median American now has more money in the bank than before the pandemic struck, even when adjusting for inflation.

That's according to a new report issued by JP Morgan Chase JPM, using data from its roughly nine million customer accounts.

These numbers, however, don't necessarily tell a story of triumph. While account balances are higher than they were in 2019, they're at their lowest point in over three years, with a steady decrease across income groups that appear to be returning to pre-pandemic levels.

J.P. Morgan has been an investor favorite in recent weeks. Shares from the bank, which is the largest in the U.S. by assets under management, have climbed almost 5% in the last five trading sessions and 2.4% on Monday alone. Several analysts raised the company's price target on Monday following better-than-expected quarterly results from last week.

Yet it's not just the bank, but also its customers who seem to be better off in 2023. According to the new report, which is the first from the bank to include information from both checking and savings accounts, median cash balances for all income groups were 10 to 15 percent higher by the end of March 2023, when compare to March 2019.

During March, the highest income quartile had median balances of around $9,000, while balances for the lowest income quartile were around $1,300.

These figures represent the lowest since April 2020, just prior to the influx of stimulus checks and a reduction in spending. The apex for the majority of bank accounts occurred in April 2021, coinciding with the arrival of the second stimulus check and that year’s tax returns.

"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, according to the Washington Post.

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The Return To Normal: A way to interpret this data is that account balances are coming back down to levels deemed normal throughout the decade prior to the pandemic, which marked the aftermath of the great recession of 2008.

A second report by J.P. Morgan looks at cash buffers across the income ladder and concludes that "the ongoing decline in the stock of cash balances that were built up in the pandemic is qualitatively consistent with pre-pandemic patterns."

Individuals gravitate towards a relatively stable level of cash buffers over time, says the report. This is leading to a decline in personal cash buffers more in line with a previous time characterized by less volatility.

Median cash buffers remained stable between 2009 and 2019 at an average of 27 days of spending buffer for the highest income quartile and 13 days for the lowest, following each individuals' normal spending habits. Those buffers rose substantially during the pandemic to reach a peak of 43 days of buffering for high-income individuals and 22 for lower in April 2021.

Now, the highest income quartile of Americans has about 35 days of buffer in their bank accounts, while the lowest income quarter has 16, as stimulus checks have not been renewed and spending remains strong.

Last week, inflation data from June came in at an encouraging 3% year-over-year, a whole percentage point decrease from May. Consumer sentiment also jumped in June after fears related to the debt ceiling crisis dwindled. The consumer sentiment measure was 27% higher on a yearly basis.

"People tend to manage their balances towards a level of expense coverage and save or spend their way back to prior averages following shocks," concludes the report.

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