April 2024

Introduction

Following fiscal policy interventions and limited spending opportunities during the COVID-19 pandemic, households built up large reserves of excess savings and maintained those excess savings well into 2023.¹ Publicly available metrics showed that households held $500 billion more in savings in March 2023 than pre-pandemic (Abdelrahman and Oliveira 2023).

In this release of the JPMC Institute Household Finances Pulse, we continue to track how much households’ real cash reserves have returned to historical trends. Our prior release described the cash balances held by different kinds of households and provided additional context to describe the state of available cash liquidity for American households. Specifically, we highlighted the importance of considering both inflation—which erodes the purchasing power of household’s cash reserves—and expected changes in behavior that comes from households aging. We use de-identified administrative banking data to examine the path of household cash balances from January 2020 through February 2024 for 8.3 million Chase customers.² To address inflation and an associated decrease in the purchasing power of households’ cash reserves, we report real cash balances rather than nominal cash balances.³

We find that median balances and cash buffers—balances scaled to spending—have returned to alignment with historical expectations. Historical trends show that as households age, they tend to increase their cash reserves, and these trends suggest that households would have increased their real cash reserves by about 15 percent since 2019 if pandemic disruptions had not happened. So while balances remain elevated relative to 2019, they are in line with expected increases over a period of more than four years.

We also find that balance trends by income and race have leveled off for many groups. For our two lowest income groups, balances have been following an upward trend since the middle of 2023. Balances for the highest income households in our sample continue to decline, which may reflect holding a smaller portion of liquid assets in cash balances in favor of reallocating to higher-interest options.

Together, these two findings suggest that many consumers have depleted their excess savings and are returning to more routine saving behavior. This is in line with research showing that individuals tend to maintain relatively stable cash buffer levels over time, spending down excess cash when balances are elevated until they return to their usual cash buffer level, at which point they stop dissaving (Wheat and Eckerd 2023).

Household Pulse: Balances through February 2024