Analyst Matthew Boss of JPMorgan gives an insight into the differences in economic experience and their impact on middle to low income households as a result of rising costs.
The US economy is currently experiencing what JPMorgan analyst Matthew Boss refers to as a “selective recession.” While some segments thrive, others face significant financial strain.
“The US economy is in a ‘selective recession,’ as lower-income Americans are struggling to get by while upper-income consumers are doing just fine. Speaking to CNBC on Tuesday, Boss pointed to the divergence in upper-income and middle-to-lower income Americans, the latter of whom are struggling to keep up with the rising cost of living as prices remain elevated and savings dwindle.”
Upper-Income Consumers: Consumers make their own choices on the high end of the economy spectrum. They are selective about their spending, considering the choices available to them.
Middle-to-Lower Income Americans: Sadly, this group is wrestling with increasing costs of living. Prices continue to rise and the savings are declining.
67% believe that their income is not keeping pace with cost of living, according to the survey done by Primerica, and more than 70% of low income consumers say they are struggling to make ends meet.
According to the Bureau of Labor Statistics, consumer prices have risen by 22% in the last five years.
According to a paper from San Francisco Fed economists, the surplus savings accumulated during COVID 19 have been decreasing. Shockingly, 38% of middle-class respondents lack a $1,000 emergency fund.
Fears of a recession are growing as the labor market weakens and interest rates are all time high. New York Fed estimates that there is a 50-50 chance of America falling into recession in the next 12 months.
