Americans Are Raiding Investment Accounts to Pay Bills

Consumer spending looks great on paper. Restaurants are still busy, airlines are reporting strong demand, and retail sales keep defying gravity. But JP Morgan Chase Institute just dropped data that reframes all of it: the frequency and amount of money Americans are pulling from investment accounts to fund everyday spending has nearly doubled from 2019 to 2026.

Think about that for a second. We are not spending because we are flush with income. We are spending because we are liquidating the nest egg. It is the financial equivalent of eating your seed corn, and it is happening across every demographic group. The trend is sharpest among Americans 65 and older and higher-income households, who have had longer to accumulate assets and therefore have more to draw down. But younger and lower-income Americans are doing it too, just at a smaller scale. Gen X middle-income households are pulling roughly $6 to $7 from investment accounts per transaction, right at the overall average.

Now layer this on top of what else is happening simultaneously. JP Morgan Chase Institute data lands while 30-year Treasury yields hit their highest level since 2002 at 5.61%, mortgage rates are at 7.58%, and over half of existing homeowners are locked into rates at or below 4% and going nowhere. There is $11.5 trillion in tapable home equity sitting dormant because borrowing against it has become brutally expensive, with less than 0.1% of available equity being tapped despite a 20% quarterly jump in HELOC originations. So the home equity piggy bank is sealed. Credit cards and BNPL are already maxed as a signaling mechanism. That leaves the brokerage account.

Jim Cramer flagged on Mad Money that over 40% of S&P 500 stocks are in bear market territory and consumer confidence is at its worst in over a decade. The jeremiah babe channel (yes, that one) actually raised a legitimate point for once: restaurant traffic data may look fine partly because there are fewer restaurants post-pandemic, and consumers may be funding meals with credit or BNPL rather than real income. The spending signal is noisy. The investment liquidation signal is not.

The bull case is that wealthier Americans drawing down investments to spend is actually a sign of confidence, rotating out of paper gains and into experiences. The bear case is that when markets eventually correct and those investment account balances shrink, so does the consumer spending that has been propping up the entire economy. It is a confidence loop that only works while asset prices hold.

When the market stops being the ATM, the ATM closes for everyone.