American households are entering the holiday shopping season with significantly less purchasing power, as real income growth has decelerated to levels not seen since the sluggish recovery following the Great Recession more than a decade ago.
A comprehensive analysis released November 25 by the JPMorganChase Institute reveals that median real income growth for Americans between ages 25 and 54 dropped to just 1.6 percent in October. This anemic pace mirrors the challenging economic conditions that characterized the 2010s labor market recovery, creating a stark contrast with economists’ increasingly optimistic projections for 2026.
The troubling income data emerges at a particularly sensitive time for American consumers, who are grappling with persistent inflationary pressures that continue to erode their spending capacity. While economic forecasters have been upgrading their outlook for next year’s expansion, the current reality paints a different picture for millions of working-age Americans.
The slowdown in real income growth represents a significant economic headwind as families prepare for holiday expenses and year-end financial obligations. With wage increases failing to keep pace with the cost of living, many households are finding their bank balances remaining flat despite continued employment.
This income stagnation particularly affects the core working demographic of 25 to 54-year-olds, who typically represent the economy’s most productive and highest-earning segment. When this group experiences reduced purchasing power, the ripple effects can be felt across multiple sectors of the economy, from retail to housing to consumer services.
The JPMorganChase Institute’s findings highlight a concerning disconnect between Wall Street optimism and Main Street reality. While financial markets and economic analysts express confidence about 2026 prospects, everyday Americans are confronting immediate financial pressures that show little sign of easing.
The comparison to the post-Great Recession period is particularly noteworthy, as that era was characterized by a painfully slow recovery that took years to restore pre-crisis living standards for many American families. The current income growth trajectory suggests similar challenges may lie ahead, despite broader economic indicators pointing toward expansion.
For policymakers and business leaders, these findings underscore the importance of addressing the gap between economic growth and household prosperity. While aggregate economic measures may show improvement, the lived experience of working Americans tells a more complicated story of financial strain and reduced economic mobility.
As the holiday season approaches, retailers and service providers are likely to feel the impact of constrained household budgets. Consumer spending, which drives roughly two-thirds of U.S. economic activity, may face headwinds if income growth continues to lag behind inflationary pressures.
The data also raises questions about the sustainability of economic optimism for 2026 if current income trends persist. Without meaningful improvement in real wages and purchasing power, even positive economic forecasts may fail to translate into tangible benefits for American families struggling to maintain their standard of living.
