A new analysis from the JPMorgan Chase Institute indicates that inflation continues to weaken the growth of household income in the United States, raising concerns about how much consumers will be able to spend during the upcoming holiday shopping season. The report shows that, after adjusting for inflation, income gains for many Americans have slowed to levels last seen during the sluggish recovery following the Great Recession.

Inflation Limits Real Income Gains

Researchers at the JPMorgan Chase Institute found that households are approaching the end of the year with minimal real income growth and flat bank account balances once inflation is taken into account. Some of the stagnation in checking and savings accounts may be explained by families shifting money into higher-yield financial products such as money market funds to benefit from elevated interest rates. But despite these strategic moves, overall purchasing power remains under pressure.

Consumer Outlook Is Mixed

The study highlights what it calls a “mixed financial picture” heading into the highest-spending weeks of the year. While higher-income households have the ability to lean on strong performance in the stock market and rising property values, lower- and middle-income groups are feeling strain from both inflation and slower wage growth.

As of October, the median income growth for workers between the ages of 25 and 54 was recorded at 1.6% after inflation, similar to the early 2010s—when unemployment was near 7% and job recovery was far slower than it is today. Despite a significantly lower unemployment rate now, wage growth has not kept pace with rising consumer prices.

Younger and Older Workers Face Different Challenges

The institute notes that younger workers—who typically benefit most from job switching, career advancements, and rapid wage increases—are not experiencing the strong income gains that normally characterize early career growth. Meanwhile, nearly half of workers aged 50 to 54 have seen their earnings decline when adjusted for inflation.

Older workers traditionally receive smaller nominal raises, which makes them more vulnerable when inflation rises or when labor market conditions soften. Even modest increases in consumer prices can push their real income into negative territory.

Holiday Spending Outlook Remains Uncertain

The report concludes that the holiday shopping season may be shaped by tight household budgets, particularly for families that relied heavily on pandemic-era savings. While overall nominal wage growth is roughly in line with pre-pandemic trends, real purchasing power remains limited due to the faster pace of inflation, which reached a 3% annual rate in September—higher than many pre-pandemic years.

Despite this, strong equity gains may help wealthier households continue spending at typical levels, contributing to an uneven holiday retail forecast.