JPMorgan Chase said low-income households, who had the most significant increases of all families in the US, now have larger cash on hand than they did before the pandemic. However, another study refutes that the money they have on hand will not be enough to support their needs due to inflation.
Inflation Continues to Soar High
Inflation continues to eat away at pay increases gained by Americans joining the hot job market, particularly lower-income groups. According to a recent study by many Republicans on the Joint Economic Committee, increasing inflation disproportionately affects low-income Americans.
Even before the pandemic, a large segment of the nation lacked the financial resources to deal with unanticipated bills. According to statistics from the Federal Reserve, almost 40 percent of Americans would have struggled to afford a $400 bill in 2017, implying that nearly half of the nation was living paycheck to paycheck. This proportion rose to 36 percent in 2020, Minneapolis Federal Reserve added. The said data shows that those stimulus payments have aided some Americans in being better prepared to cope with short-term costs.
Low-Income Families Still Got Cash On Hand To Sustain Needs
President Joe Biden signed the COVID-19 relief measure into law earlier this year, which contained a monthly child tax benefit for American families with dependent children. According to a study conducted by Columbia University’s Center on Poverty and Social Policy, the child tax credit might reduce child poverty by 45 percent. The credit will expire at the end of 2021 as it now stands.
After receiving stimulus cheques, families experienced considerable gains in cash on hand. JPMorgan Chase said the April child tax credits bolstered low-income households’ wages as inflation started to climb rapidly. These gains, however, were swiftly depleted by costs such as food, housing, and other essentials, all of which saw price rises in the previous year. Families with higher earnings and no dependent children, on the other hand, kept their cash balances growing, according to the survey.
Families with dependent children had higher checking account balance increases throughout each cycle of stimulus, as assessed by receipts of the advanced child tax credit and stimulus payments, but they also spent those balances at a faster pace than those without dependents. Single-parent homes did much worse, according to the research.