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Inflation weighing on US income growth ahead of holiday season, study says
Younger workers are not seeing the same strong income gains that would typify those changing jobs and earning promotions early in their careers.
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Reuters - Tue, 25, Nov 2025
- 15:27 EST
- 10
People visit a Christmas store in a holiday market featuring artisans from around the world at Bryant Park in New York City, U.S., November 16, 2025. / REUTERS/Eduardo Munoz
Inflation has helped set back income growth to levels comparable to the slow recovery from the Great Recession more than a decade ago, potentially constraining the spending power of U.S. consumers ahead of the critical holiday retail season, according to an analysis of bank account data from the JPMorgan Chase Institute.
"Households are going into the end of the year with weak income growth and bank balances that remain flat, after adjusting for inflation," institute researchers concluded, while noting that in some cases checking and savings account balances may reflect money being diverted to higher-yield money market or similar funds to take advantage of current interest rates.
Still, the overall picture for consumer pocketbooks was at best mixed ahead of the peak spending weeks of the year, with some key demographics stressed, but higher wealth groups able to tap equity and property market gains if needed.
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As of October, the institute estimated median income growth for individuals between 25 and 54 years old at 1.6 percent once adjusted for inflation, similar to that seen in the early 2010s when the unemployment rate was running around 7 percent and falling only slowly, compared with the current jobless rate of 4.4 percent.
Younger workers are not seeing the same strong income gains that would typify those changing jobs and earning promotions early in their careers, the institute found. Roughly half of workers in the 50-to-54-year-old group have suffered an earnings loss once accounting for inflation.
"With pandemic-era excess cash liquidity in the rearview mirror, consumers are facing a holiday spending season with budgets tempered by tepid income growth but augmented by strong stock market gains - the latter highly unequally distributed," the institute concluded. "Importantly, nominal growth remains roughly consistent with pre-pandemic levels, but real purchasing power gains are at a relatively low level because of the higher pace of consumer price increases."
Since older workers typically see slower nominal wage gains, it is "easier for an uptick in inflation or weakening in the labor market to send them into negative territory."
Consumer prices as of September were rising at a 3 percent annual rate, a level rarely eclipsed in the years before the pandemic, up from a recent low of 2.3 percent in April.
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