- According to JPMorgan’s Matthew Boss, low-income Americans are already in a recession.
- The analyst said the US is experiencing a “selective” recession, as are some consumers.
- 67% of middle-class Americans said they believe their incomes are not keeping up with the cost of living.
JPMorgan analyst Matthew Boss said the U.S. economy is in a “selective recession,” meaning higher-income consumers are doing well while lower-income families are struggling to make ends meet.
talk to CNBC Vos on Tuesday pointed to the disparity between high-income and middle- and low-income Americans. The latter are struggling to keep up with rising costs of living as prices remain high and savings dwindle.
“The high-end consumer is becoming more selective. I think the low-end consumer is like melting ice… What I’m calling now is a selective recession,” Voss said.[B]Our research shows that more than 70% of low-income consumers currently say they are struggling to make ends meet. ”
Other market commentators say consumer spending will slow down, especially as the U.S. middle class feels the threat of inflation. In a Primerica poll conducted in the first quarter, 67% of middle-class households said they believed in their policies. income was less than the cost of living.
Inflation has slowed dramatically from its 2022 highs, but consumers are still feeling the pain from years of accumulated price increases. Overall consumer prices increased by 22% That’s an increase from five years ago, according to the Bureau of Labor Statistics.
“If you look at low- to moderate-income consumers, they are under pressure, and that pressure is continued inflation. It doesn’t matter if inflation is getting worse every month; It’s just a gradual increase in the strain on their savings,” Voss said.
Most Americans have likely exhausted the savings they accumulated during the pandemic. According to the paper, excess savings from the coronavirus era were likely used up in March of this year. Economist at the Federal Reserve Bank of San Francisco. Thirty-eight percent of middle-class respondents in the Primerica survey added that they do not have a $1,000 emergency fund.
Fears of a recession are growing as Americans survey a weakening job market and expect interest rates to stay high for a long time. The New York Federal Reserve Bank estimated in a new report that there is a 50-50 chance that the U.S. will fall into recession within the next 12 months. Recession forecast.
