Investing.com investing.com 02 Jan, 2021 07:45 am

Low-income U.S. households are spending savings quicker than high earners

Low-income U.S. households are spending savings quicker than high earners
Low-income U.S. households are spending savings quicker than high earners: study

png) The JPMorgan Chase study showed that cash balances appeared steady on average after rising earlier this year, in line with a separate report released by the Federal Reserve last week showing that balances in cash, checking accounts and savings deposits rose over the three months ending in September to a record $13.But a look at cash balances for the median household - which is not affected as much by households with abnormally high, or unusually low, account balances - showed a more volatile experience.By the end of October, the median low-income family spent 64% of the extra cash they accumulated this year compared with last year, leaving them with about $236 in extra cash, according to a report released Wednesday by the JPMorgan Chase (NYSE: JPM ) Institute.The median cash balance for checking account holders studied by JPMorgan Chase rose in the spring when the government distributed cash payments to most households - and balances have been declining since.

Those households could experience another substantial drop in income and spending at the end of the year when unemployment benefits are set to expire for millions of workers participating in pandemic programs created by the CARES Act, the researchers said.Consumers have previously cut spending on non-durable goods by 12% after losing unemployment benefits, and those receiving jobless benefits reduced spending by 14% over the summer after a $600 weekly supplement to unemployment benefits expired at the end of July, the study noted.

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