Flat bank balances and slowing wage growth signal mounting pressure on consumers despite a more upbeat 2026 economic forecast.
Real income growth for U.S. households remained unusually weak heading into the holiday season, even as economists upgraded their outlook for next year’s economic expansion, according to a new report from the JPMorganChase Institute.
Median real income growth for Americans aged 25 to 54 slowed to 1.6 percent in October, a pace comparable to the soft labor market recovery in the 2010s following the Great Recession, the Nov. 25 analysis shows.
“With pandemic-era excess cash liquidity in the rearview mirror, consumers are facing a holiday spending season with budgets tempered by tepid income growth but augmented by strong stock market gains,” the report states. “Importantly, nominal growth remains roughly consistent with pre-pandemic levels, but real purchasing power gains are at a relatively low level because of the higher pace of consumer price increases.”
Younger workers are lagging historical early-career norms, a reversal of the rapid job-switching-driven wage growth seen earlier in the post-COVID-19 pandemic period. Older workers are now experiencing outright erosion in purchasing power.
“Workers in their early fifties—who regularly face slower income gains—are now experiencing negative real income growth,” the report found, attributing the declines to muted wage gains colliding with persistently high inflation.
Inflation has risen in recent months, climbing to 3 percent in September after touching a recent low of 2.3 percent in April, data from the Bureau of Labor Statistics (BLS) shows.
Bank balances have been flat since early 2024, holding at levels about 23 percent above 2019 but failing to grow as households age, an unusual shift from pre-COVID-19 pandemic patterns.
“That is less than historical growth trends over a six-year period, though no longer declining,” JPMorganChase analysts said.
Overall, the report says that American households “are going into the end of the year with weak income growth and bank balances that remain flat, after adjusting for inflation.”
New federal data point to the same cooling trend. In its Nov. 21 real earnings report, the BLS said real average hourly earnings were unchanged in September, as a 0.2 percent wage gain was offset by a 0.3 percent rise in consumer prices. Real average weekly earnings fell 0.1 percent with no change in the length of the workweek.
By Tom Ozimek
