Ninety-nine percent of Americans will have less money in the bank by mid-2024 than they did pre-pandemic - as inflation and high interest rates batter their savings, JPMorgan analyst say
- Many Americans were able to save thousands of dollars during the pandemic
- High interest rates have led to expensive car loan and credit card repayments
- JPMorgan predicts that by next June 99% of Americans' savings will have run dry
Come mid-2024 some 99 percent of Americans be less well off financially than they were before Covid, JPMorgan analysts predict.
A new report by the bank suggests that by June 2024 all but the wealthiest one percent will have burned through any savings they were able to accumulate during the pandemic.
Many families were able to save thousands of dollars during the pandemic as they worked from home - not needing to pay to commute or buy lunch near the office - and received federal Covid relief payments.
Typically, Americans boosted savings by a fifth. That means anyone with, say, $20,000 in the bank boosted it to $24,000.
For 80 percent those savings have used the extra money, according to the research note published by JPMorgan market strategist Marko Kolanovic on Thursday.
![By mid-2024 some 99 percent of Americans be less well off financially than they were before Covid, JPMorgan analysts predict. Pictured is a shopper in a grocery store in San Anselmo, California - prices for food and drink have soared in the past two years](https://i.dailymail.co.uk/1s/2023/12/13/14/78910385-12856607-By_mid_2024_some_99_percent_of_Americans_be_less_well_off_financ-m-23_1702479364570.jpg)
By mid-2024 some 99 percent of Americans be less well off financially than they were before Covid, JPMorgan analysts predict. Pictured is a shopper in a grocery store in San Anselmo, California - prices for food and drink have soared in the past two years
![A research note authored by JPMorgan market strategist Marko Kolanovic (pictured) suggests that an economic downturn and likely a recession is expected next year](https://i.dailymail.co.uk/1s/2023/12/13/14/78910441-12856607-A_research_note_authored_by_JPMorgan_market_strategist_Marko_Kol-a-18_1702478054008.jpg)
A research note authored by JPMorgan market strategist Marko Kolanovic (pictured) suggests that an economic downturn and likely a recession is expected next year
High interest rates this year led to higher credit card and auto loan repayments, eroding many Americans' savings entirely. And the vast majority of those that still do have some reserves are soon likely to be drained of them, according to the note.
Families have also been paying more for food and groceries after rampant inflation.
JP Morgan's analysis echoes the findings from separate report in September - which also found Americans have less cash in reseve than before the pandemic.
Kolanovic argued that the money struggles faced by Americans next year would likely be intertwined with a recession, which many economists had previously forecast would happen this year.
On the positive side, Kolanovic said that because Americans are locked into mortgages with low interest rates defaults on residential loans would be less of an issue.
Although the outlook for 2023 was initially gloomy, the economy was able to stave off a recession due to strong consumer spending and the positive performance of the US stock market.
Kolanovic attributed some of the market performance to investors pulling money from Chinese markets and investing instead in the US.
Also boosting the performance of the overall economy has been a handful of technology stocks, many of which are in the artificial intelligence (AI) sector.
He also suggested that many major US corporations were able to keep earnings high thanks to inflation as they were able to generate increased revenue despite having lower sales.
![The bank attributed some of the US stock market performance to investors pulling money from Chinese markets and investing instead in the US. Pictured is its headquarters in London](https://i.dailymail.co.uk/1s/2023/12/13/13/78910383-12856607-image-m-6_1702474801353.jpg)
The bank attributed some of the US stock market performance to investors pulling money from Chinese markets and investing instead in the US. Pictured is its headquarters in London
'Inflation has played a significant role in propping up corporate earnings, which were in many cases delivered by selling fewer units at higher prices or by cost-cutting,' read the note.
'We think that the decline in inflation and economic activity that we forecast for 2024 will at some point make investors worry or perhaps even panic.'
As such, JPMorgan economists predict that in the second half of next year the Federal Reserve will start winding down benchmark interest rates, potentially as fast as 0.25 percent per policy meeting, according to the report.
The analyst wrote: 'The US 10-year note yield is expected to drop to 3.75 percent over the next year if there is a gradual economic slowdown, and more if the economy slides into a recession.'