More Americans shift money from checking and savings to accounts with investment income, study says

Key Points

• A new JPMorganChase Institute analysis shows more Americans shifting funds from checking and savings accounts into brokerage accounts, money market funds and certificates of deposit to earn investment income.
• This trend helps explain the U.S. economy’s resilience, as consumer spending remained strong despite low growth in traditional deposit accounts.
• Since mid-2024, total cash reserves—including funds in higher-yield accounts—have increased and are approaching historical growth trends.
• Households earning under $35,000 saw their total cash balances grow at an annual rate of 5% to 6%, even though median checking and savings balances remain modest.

WASHINGTON (AP) —

New research finds that more Americans are shifting their money from checking and savings accounts into financial vehicles that pay an investment income — a trend that helps to explain the resilience of the U.S. economy after a bout of high inflation and recent uncertainty due to tariffs.

The analysis by JPMorganChase Institute examined the accounts of 4.7 million households and found that people's total cash reserves are increasing when including new amounts going into brokerage accounts, money market funds and certificates of deposit to assess people's well-being.

Inflation-adjusted cash balances in checking and savings accounts “remain low with a flat-growth trajectory,” but since the middle of 2024 total cash reserves have been increasing and approaching historical growth trends once the additional accounts are included, the analysis said.

“Families across many income bands are now seeing a turnaround in their total cash,” said Chris Wheat, president of the institute.

Wheat said it had been “hard to square the circle” of consumer spending staying strong despite the lack of growth in checking and savings accounts, an issue that can now be explained by people in a higher-interest rate environment shifting more money into accounts that yield investment returns. He said people appear to be using the other accounts to manage their cash, rather than simply making long-term investments.

Wheat cautioned, however, that the trend might be short term and that the institute doesn't have a basis yet as to whether it will continue.

The analysis also found that households with incomes generally lower than $35,000 had their total cash balances increase at an annual rate of 5% to 6%. The lowest income quartile tend to have checking and savings account balance of just over $1,000, while the median balances of the highest income quartile are above $8,000.