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Checking Account Growth Signals Strength in Economic Recovery

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As a result of federal stimulus programs to reinvigorate the economy following the Covid-19 pandemic, consumers have filled their checking accounts, ready to spend when the U.S. economy slowly reopens and returns to normal, pre-pandemic levels. According to JP Morgan CEO Jamie Dimon, government stimulus funds have allowed the average consumer to greatly increase the amount of money they hold in their savings and checking accounts. In total, consumers hold approximately $2 trillion more in their savings accounts than before the pandemic.

Reports from JP Morgan indicate that their total amount of loans decreased by 4%, while deposits skyrocketed by 24 percent up to $2.28 trillion. While this typically would signal a decline in the power of the economy, Dimon says that this indicates that “[consumers] are paying down their credit card loans.” and that they are “coiled, ready to go, and they’re starting to spend money.”

Following three stimulus payments totaling $3200 and massively expanded unemployment benefits, Americans have plenty of money ready to spend. Most Americans saved an average of 30 percent of their stimulus money and used the rest to repay debt or make purchases. Although certain industries are still in decline as a result of the pandemic, consumer spending levels on credit and debit cards have returned to normal pre-pandemic levels. As more people receive vaccines to protect against Covid-19, declining industries like travel and entertainment will continue to recover and restore some of the lost demand for loans in the latter half of 2021. 

Despite the strong recovery in the economy over the past several months, Dimon still worries about the growing income inequality that is threatening minority groups across the country. Referring to the killing of George Floyd in May 2020 as “murder,” Dimon makes clear to corporations and consumers alike that racism and income inequality are two of the largest problems facing the United States today. Dimon also addressed these concerns with shareholders and explained that JP Morgan is offering more money to Black-owned small businesses and hiring and training more minority wealth managers to combat growing inequality. 

To further address income inequality, Dimon says that he supports a much higher federal minimum wage and that he supports raising taxes on the wealthy to fund improvements to infrastructure, education, and the healthcare system. Dimon’s support for affordable and accessible healthcare culminated in efforts with Warren Buffet and Amazon to form a healthcare company called Haven, which shut down earlier this year in February. The company was forced to close amid growing bank regulations that prevented the companies from working together effectively during the pandemic. Dimon notes that he will continue to fight for an improved healthcare system in the United States as a method of fighting back against inequality.

Additionally, JP Morgan plans to further reduce inequality with a $2.5 trillion investment over the next ten years into solutions that deal with the consequences of climate change and help create green development with limited or net-zero carbon emissions. 

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