The US economy is in a 'selective recession' as lower-income consumers can't cover the cost of living, JPMorgan says

• Lower-income Americans are already in a recession, according to JPMorgan's Matthew Boss.
• The analyst said the US was in a "selective" recession as some consumers .
• 67% of middle-class Americans said they believed their income wasn't keeping up with the cost of living.

The US economy is in a "selective recession," as lower-income Americans are struggling to get by while upper-income consumers are doing just fine, according to JPMorgan analyst Matthew Boss.

Speaking to CNBC on Tuesday, Boss pointed to the divergence in upper-income and middle-to-lower income Americans, the latter of whom are struggling to keep up with the rising cost of living as prices remain elevated and savings dwindle. 

"You have the consumer at the high end who is being more choiceful. 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 pointed to a coming slowdown in consumer spending, especially as middle-class Americans feel the pinch of inflation. 67% of middle-class households polled by Primerica in the first quarter said they believed their income was falling behind the cost of living. 

Inflation has cooled dramatically from its highs in 2022, but consumers are still feeling the pain of accumulated price increases over the years. Consumer prices overall are 22% higher than they were five years ago, according to the Bureau of Labor Statistics.

"You focus 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 blown through 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. 38% of middle-class respondents in Primerica's survey added that they didn't have a $1,000 emergency fund. 

Recession fears have been on the rise as Americans survey a weakening job market and anticipate rates staying higher for longer. The US has a 50-50 chance of slipping into a downturn within the next 12 months, the New York Fed estimated in its latest recession forecast.