Household deposit balances have increased across all income groups in early 2026, driven in part by larger tax refunds, according to data from Bank of America. Lower-income households experienced the most significant relative gains, providing a temporary cushion for spending. However, these deposit increases may not last, as balances typically decline later in the year.
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Younger and lower-income households might deplete their deposits more quickly this year due to rising cost pressures. The sustainability of recent improvements in the labor market and wage growth for lower- and middle-income workers will be crucial for these households as summer approaches.
According to the latest insights from the Bank of America Proprietary Market Landscape Insights Study, approximately half of lower-income households report their financial situation as "poor" or "terrible." Nevertheless, the combination of declining gasoline prices and increased deposits could serve as a mild support in narrowing the disparities in spending growth.