The JPMorgan Chase Institute is focused on conducting original research, developing expert insights, framing critical economic problems, and convening policymakers, business leaders, and other decision makers to consider the most pressing economic issues.
The research agenda of the Institute extends across the portfolio of JPMorgan Chase’s lines of business and global reach. The Institute focuses its analyses on consumer finance and financial health, businesses large and small, financial markets, and other critical economic topics. Our timely data, combined with expert insights, are unique resources the JPMorgan Chase Institute will use to provide a comprehensive perspective on the complex inner workings of the economy to help policymakers, businesses, and nonprofit leaders make smarter decisions to advance global prosperity.
How Tax Refunds Enable Healthcare Spending
Consumers’ out-of-pocket spending on healthcare is higher when they have more cash on hand, which suggests that cash flow dynamics may be an important driver of when consumers’ have access to care. In this report, we focus on a special cash flow event—the arrival of a tax refund—to address important and heretofore unanswered questions around the relationship between cash flow and healthcare.
Mortgage Modifications after the Great Recession
New Evidence and Implications for Policy
The aftermath of the Great Recession was a particularly difficult period for many homeowners. Unemployment increased and house prices declined, leaving many homeowners struggling to make their monthly mortgage payments and unable to sell their homes. In this report, the JPMorgan Chase Institute used data on mortgage modifications to measure the impact of reductions in monthly mortgage payments and mortgage principal on default and consumption. We found that payment reduction was effective in reducing default while principal reduction had no impact on default or consumption, and default was correlated with a considerable loss in income. Our analysis suggests that mortgage modification programs that are designed to target substantial payment reduction will be most effective at reducing mortgage default rates. Modification programs designed to reach affordability targets based on debt-to-income measures without regard to payment reduction or target a
specific LTV ratio while leaving borrowers underwater may be less effective at reducing defaults.
Paying a Premium
Dynamics of the Small Business Owner Health Insurance Market
Nonemployer small business owners who pay for their own health insurance epitomize two poorly understood features of the US economy: the small business sector and the individual health market. The economic experiences of these small business owners can inform both the well-being of the small business sector and the health of a substantial share of the individual health insurance market. We constructed a sample of over 30,000 firms who hold business banking deposit accounts with Chase to produce a monthly view of health insurance premium payments and other operating expenses from January 2014 to April 2017.
The Healthcare Spending of 2 Million US Families
The future of family-paid healthcare costs rests with healthcare policy choices currently being debated and out-of-pocket costs are a key piece of that picture. The JPMorgan Chase Institute set out to better understand out-of-pocket healthcare spending among US households. Building off a sample of 2.3 million de-identified core Chase customers aged 18 to 64 between 2013 and 2016, we created the JPMorgan Chase Institute Healthcare Out-of-pocket Spending Panel (JPMCI HOSP). We explored the levels, concentration, and growth of out-of-pocket healthcare spending and the implications of these spending trends for overall household financial health. The JPMCI HOSP provides a first-ever look into out-of-pocket healthcare spending for households on a month-to-month basis, at the state, metro, and county level, and as recent as 2016. In this report, we describe the creation of, and initial insights gleaned from, this new data asset.
The Gender Gap in Financial Outcomes
The Impact of Medical Payments
Extraordinary medical payments have negative impacts on financial outcomes, and this is especially true for women. This brief underscores the importance of efforts to address the gender gap in financial outcomes and reduce debt burdens for women. In addition, should out-of-pocket healthcare costs increase due to changing tax credits or the elimination of essential benefits, women may have to shoulder more of the economic burden of receiving care.
The Consumer Spending Response to Mortgage Resets
Microdata on Monetary Policy
The Great Recession brought to the forefront many unanswered questions about how monetary policy plays out at a microeconomic level, notably the question of how changes in the federal funds target rate impact personal consumption for individual households. In this report, the JPMorgan Chase Institute examines the credit card spending of a sample of US homeowners with an adjustable-rate mortgage to help answer this question. We find that homeowners responded by increasing their spending both in advance of the anticipated drop in their mortgage payment and in the post-reset period, despite a considerable drop in housing wealth. Our analysis further highlights how housing policy that influences the share of fixed-rate mortgages versus variable-rate mortgages can impact the overall effectiveness of monetary policy.
Going the Distance
Big Data on Resident Access to Everyday Goods
In recent years, local decision makers have become increasingly concerned with questions of resident access to amenities. In this brief, the JPMorgan Chase Institute focused on access to retail for residents in Detroit and New York. We found that residents make most of their purchases outside of their local neighborhood, and that the distance between where residents live and shop is greatest for low income residents in both cities.
Coping with Costs
Big Data on Expense Volatility and Medical Payments
Americans across the income spectrum experience tremendous income and expense volatility, and this volatility has been on the rise. In this report, we examine the sources of expense volatility and the changes in financial behavior that coincide with extraordinary medical payments. Integrated, high-frequency data of income, spending, assets, and liabilities shed new light on expense volatility and how behavior changes with this volatility, which is critical to improving policies and solutions to strengthen the financial resilience of American families.
The Ups and Downs of Small Business Employment
Big Data on Small Business Payroll Growth and Volatility
Small businesses provide work for nearly half of all employees in the US, but relatively little is known about the underlying dynamics of employment growth and volatility at the individual small business level. In this report, we find that, although most small business owners experience low payroll growth each year, the month-to-month volatility of payroll expenses around that growth can be quite high, making it more difficult for small business owners to manage their cash flows.
The Online Platform Economy
Has Growth Peaked?
The Online Platform Economy has been contributing to the changing nature of work. But growth in participation on labor and capital platforms has peaked. This report, which draws on one of the largest samples of platform participants to date, explores the dynamics of participation and earnings on platforms in order to better understand how growth has slowed.
Shedding Light on Daylight Saving Time
Daylight Saving Time has been advanced as a policy that both saves energy and increases consumer spending. In this brief, the JPMorgan Chase Institute has explored whether or not the latter claim is supported by evidence. We found that daily card spending per capita in Los Angeles experienced a relative increase of 0.9 percent in the 30 days following the start of DST, and experienced a relative decline of 3.5 percent in the 30 days following end of DST.
Cash is King: Flows, Balances, and Buffer Days
Evidence from 600,000 Small Businesses
Small businesses are critical to the growth of the U.S. economy, employing nearly half of the U.S. workforce and accounting for 45 percent of U.S. GDP. For these small businesses—many of whom lack access to credit—cash reserves are a critical tool for meeting liquidity needs. However, we find that most small businesses in the U.S. lack a sufficient cash reserve cushion to face a significant economic disruption or downturn.
Recovering from Job Loss
The Role of Unemployment Insurance
Unemployment is one of the most common economic shocks that families experience. However, in 2015, just 27 percent of people looking for work received unemployment insurance – a record low recipiency rate. This report assesses the effectiveness of unemployment insurance at preserving economic well-being in the face of an income shortfall from unemployment.
The Consumer Response to a Year of Low Gas Prices
Evidence From 1 Million People
In 2015, gas prices in the United States were 25 percent lower than they had been in 2014. The US Energy Information Administration projected that this drop in prices would put roughly $700 back into the pockets of US households. Understanding in detail how big this boost really was, who experienced it, and how people responded has important implications for the economy and policymakers.
Paychecks, Paydays, and the Online Platform Economy
Big Data on Income Volatility
Americans experience tremendous income volatility, and that volatility is on the rise. This report from the JPMorgan Chase Institute digs deeper into the demographics and sources of income volatility and provides an unprecedented look at the impact of the Online Platform Economy.
Profiles of Local Consumer Commerce
Insights from 12 Billion Transactions in 15 US Metro Areas
New research from the JPMorgan Chase Institute shows that the year-to-year growth of consumers' everyday spending on most goods and services in 15 major US metropolitan areas has slowed dramatically, from 5 percent in the second quarter of 2014 to 0.5 percent in the comparable period in 2015.
How Falling Gas Prices Fuel the Consumer
Evidence From 25 Million People
The US government projects that American households will save on average $700 this year on gasoline, as the price of a gallon of gas has fallen by nearly $1.50 from its peak of $3.70 in April 2014 and is projected to remain low through 2015. But who feels the biggest increase in spending power? How much of that extra money do consumers spend, and what do they spend it on?
Big Data on the Financial Ups and Downs of US Individuals
In this inaugural report, researchers from the JPMorgan Chase Institute analyzed proprietary data from JPMorgan Chase & Co. to determine how income and consumption fluctuate on a monthly and a yearly basis.
This material is a product of JPMorgan Chase Institute (“JPMCI”) and is provided to you solely for general information purposes. Unless otherwise specifically stated, any views or opinions expressed herein are solely those of the authors listed, and may differ from the views and opinions expressed by JPMS’s Research Department or other departments or divisions of JPMorgan Chase & Co. or its affiliates. This material is not a product of the Research Department of J.P. Morgan Securities LLC (“JPMS”). Information has been obtained from sources believed to be reliable but JPMorgan Chase & Co. or its affiliates and/or subsidiaries (collectively J.P. Morgan) do not warrant its completeness or accuracy. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. The data relied on for this report are based on past transactions and may not be indicative of future results. The opinion herein should not be construed as an individual recommendation for any particular client and are not intended as recommendations of particular securities, financial instruments or strategies for a particular client. This material does not constitute a solicitation or offer in any jurisdiction where such a solicitation is unlawful.
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