Middle- and low-income Americans running out of disposable cash: SF Fed
The Conference Board chief economist Dana Peterson analyzes the job market and consumer confidence on Making Money.
Middle- and lower-income Americans are running low on disposable cash and are on track to have less than they were on pace to have before the COVID pandemic disrupted the economy, a study by the Federal Reserve Bank of San Francisco found.
Research published Monday by the San Francisco Fed found that while the top 20% of households by income saw their liquid assets – including cash and funds in savings, checking and money market accounts – rise sharply in 2020 and early 2021, they dropped and are now about 2% below what would've been expected without the pandemic's impact.
The trend is even worse for the American households that represent the lowest 80% by income, who saw their assets rise less sharply and depleted their excess savings more quickly. That has left their liquid assets about 13% lower than the projected path of their finances before the pandemic.
That development comes as credit card delinquencies among middle- and low-income families rose earlier, faster and to «notably higher» rates than those of high-income families, the research found.
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New research from the San Francisco Fed found that middle- and low-income households have seen their cash and liquid assets decline. (Joe Raedle / Getty Images)
«Smaller financial cushions and heightened credit stress for households at the bottom 80% of the income distribution pose a risk to future consumer spending growth,» wrote economists Hamza Abdelrahman, Luiz Edgard Oliveira and Adam Shapiro.
Consumer spending, which accounts for about two-thirds of U.S. economic output, and the
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