American Purchasing Power Slows to Decade-Low Pace in September

With a weakening labor market and a less dynamic economy than ever before, Americans’ purchasing power is suffering. According to data from the latest report by U.S. investment bank JP Morgan, the average incomes of working-age U.S. citizens have slowed their growth to lows not seen since the 2010s, with the country’s economy still mired in the Great Recession.

Specifically, the bank puts the increase in the purchasing power of people between the ages of 25 and 54 at 5% in September. The percentage, however, drops to around 2% after adjusting for the effect of inflation. “In terms of real purchasing power, the recent level is close to the slowest pace of growth in the last decade, excluding the pandemic and subsequent inflation,“ the report explains.

It is precisely inflation that has driven down the rise in Americans’ incomes, since, excluding the effects of the Consumer Price Index (CPI), growth has been relatively flat since the recovery from the pandemic. Along with rising prices, the US bank also mentions the weakness of the labor market, with the unemployment rate just one point above the minimum recorded in 2023 and sluggish job creation.

Adjusted for inflation, income growth in September is less than 2%

The report also highlights the greater intensity of this dynamic among young people, a group that, while having lower incomes in their first stage of working life, “post higher relative growth.“ The data compiled by JPMorgan, however, show how the gap between income growth among the various age groups has been progressively narrowing, to just four points wider among those aged 25 to 29 and those aged 40 to 49.

This difference represents a downward shift from the 6% and 7% difference that existed between the two groups before the pandemic, and which was even maintained during the health crisis. Compared to the last decade, moreover, “recent data suggest a smaller advantage even than in the early 2010s,“ when the labor market was still recovering from the 2008 economic crisis.

“The data reflect a slowdown in the growth of purchasing power for all individuals, in addition to a significant loss of dynamism in wage growth during the early years of young people’s careers,“ the U.S. bank explains. The younger population, moreover, is the one that is suffering the most from the slowdown in the U.S. labor market. The JPMorgan report warns that, although the number of layoffs in the private sector is still low, job creation is decreasing, which directly affects young people entering the labor market.