The Blubber

The US economy is experiencing a "selective recession," where lower-income Americans are struggling while upper-income consumers are faring well, according to JPMorgan analyst Matthew Boss.

Speaking to CNBC on Tuesday, Boss highlighted the disparity between upper-income and middle-to-lower-income Americans. The latter group is having difficulty keeping up with the rising cost of living as prices remain high and savings dwindle.

"You have the consumer at the high end who is being more selective. The low-end I do think is a melting ice cube … What I'm calling it now is a selective recession," Boss said. "[B]y our survey, over 70% of low-income consumers right now are saying that they're struggling to make ends meet."

Other market commentators have noted a looming slowdown in consumer spending, especially as middle-class Americans feel the pinch of inflation. In the first quarter, 67% of middle-class households polled by Primerica said they believed their income was falling behind the cost of living.

Although inflation has cooled significantly from its highs in 2022, consumers are still grappling with the cumulative effect of price increases over the years. According to the Bureau of Labor Statistics, consumer prices overall are 22% higher than they were five years ago.

"Focusing on that low- to middle-income consumer, they're under pressure, and the pressure is really that the inflation ... continues to last. Each month that we move forward, it doesn't matter that inflation is not worsening, it's just an incremental toll on that savings that they built," Boss said.

Most Americans have likely exhausted the savings they accumulated during the pandemic. Excess savings from the COVID era were probably depleted in March of this year, according to a paper from San Francisco Fed economists. In Primerica's survey, 38% of middle-class respondents said they didn't have a $1,000 emergency fund.

Recession fears have been growing as Americans observe a weakening job market and anticipate higher interest rates for a prolonged period. The New York Fed estimated in its latest recession forecast that the US has a 50-50 chance of slipping into a downturn within the next 12 months.