Most Americans have already drained the excess savings they made during the Covid-19 pandemic, Marko Kolanovic, a senior stock strategist at JPMorgan bank, said in a note this week.
According to Kolanovic, inflation-adjusted liquid assets such as deposits and money market funds of nearly all US consumers will be below 2019 levels by mid-2024.
“It is likely that only the top 1% of consumers by income will be better off than before the pandemic,” he warned, noting the recent surge of credit card and auto loan delinquencies and a growing number of bankruptcy protection filings.
According to JPMorgan’s earlier calculations, Americans’ excess savings reached a record high in August 2021 at $2.1 trillion. However, in October this year, they were down to around $148 billion. The bank’s strategists explained at the time that the trend stems from “tighter credit conditions and rising rates, wind-down of Covid-era stimulus and relief programs,” as well as multiple years of above average inflation.
Kolanovic noted that the housing market is so far stable despite high borrowing costs, “as consumers locked in low interest rates.”
