The lion's share of consumers in the United States are in a worse financial state than pre-pandemic, having exhausted their savings accumulated during the COVID-19 era, according to a report by JPMorgan.

What Happened: Business Insider reported that a note released on Thursday by JPMorgan's chief stock strategist, Marko Kolanovic, revealed that 80% of Americans, who make up approximately two-thirds of total consumption, have depleted their pandemic savings.

Kolanovic pointed out that only the top 1% of consumers by income will be financially better off than before the pandemic. He flagged rising credit card and auto loan delinquencies and an uptick in Chapter 11 filings.

JPMorgan had previously estimated that excess savings hit a peak of $2.1 trillion in August 2021, largely propelled by government stimulus checks. By October, this figure had fallen to less than $148 billion.

The bank underscored that consumers are struggling with tighter credit conditions, rising rates, the end of COVID-era stimulus and relief programs, declining excess savings and liquidity, and several years of above-average inflation.

It was highlighted that elder millennials, born in the 1980s, have taken a significant hit, having weathered both the 2008 financial crisis and the pandemic during their prime working years.

However, JPMorgan noted that there are no significant delinquencies in residential mortgages, as consumers have secured low interest rates. Yet, existing home sales have plummeted to near-record lows, and roughly $6.5 trillion of commercial real estate debt remains a concern.

Why It Matters: The findings add to the gloomy economic picture painted by JPMorgan in recent times. In October 2023, Kolanovic had warned of a potential 20% downturn in the S&P 500 due to rising interest rates, urging investors to consider cash as a safety net.

Furthermore, in November, JPMorgan had forecasted an 8% drop in the S&P 500 next year, positioning itself as the most bearish investment bank on Wall Street.