How are lower-income US households responding to economic challenges?

Lower-income US households have seen a 5-6% growth in their total cash reserves, as they shift their money to higher-yield options like money market funds and CDs, helping to fuel robust consumer spending.

What financial tools are US consumers using to earn better returns?

US consumers are moving their money into high-yield savings accounts, CDs, money market accounts, and brokerage accounts to earn better returns on their savings, rather than leaving it in traditional checking or savings accounts.

Why is US consumer spending remaining strong despite economic pressures?

The surge in consumer spending is being driven by lower-income households increasing their total cash reserves by 5-6%, as they move their money into higher-yield financial tools like money market funds and CDs.

Home / Business and Economy / Lower-Income Households Boost Savings, Fuel Robust US Consumer Spending

Lower-Income Households Boost Savings, Fuel Robust US Consumer Spending

18 Aug

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Summary

Lower-income households see 5-6% growth in total cash reserves
Shift to higher-yield options like money market funds and CDs
Consumer spending remains strong despite inflation and stagnant bank balances

Lower-Income Households Boost Savings, Fuel Robust US Consumer Spending

As of August 18th, 2025, the US consumer spending landscape is defying expectations. Despite persistent inflation at 2.7% and shrinking checking and savings account balances, consumer spending in the country remains surprisingly strong.

The key to this trend may lie in the shifting financial habits of American households. According to a recent report by JPMorgan Chase's Household Finances Pulse, while traditional bank balances have flatlined, total cash reserves, including money market funds, brokerage accounts, and certificates of deposit (CDs), are growing at a steady pace of 3% to 5% per year.

The most notable gains are among lower-income households. Those in the lowest income quartile saw their total cash reserves grow by about 5% to 6% over the past year. This shift towards higher-yield options may be one of the reasons consumer spending hasn't slowed down, even amidst economic challenges.

Instead of leaving their money in checking or standard savings accounts, many households are now opting for financial tools that offer better returns, such as high-yield savings accounts, CDs, money market accounts, and brokerage accounts. This strategic move is helping them maintain their spending power in the face of inflation.

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