How much money is in your checking account?

New research suggests checking account customers are doing something that indicates they don’t feel as secure as they would like about the economy. They’re not feeling as safe as some economists would have expected and one red flag is the amount of money people are storing in their checking accounts. Here’s why it matters — and what it might say about you:

Moebs Services, an economic-research firm in Lake Bluff, Ill., analyzed over 12,000 depository call reports and compared them to the Federal Reserve monetary data for 2017. The Moebs Checking Study shows credit union checking account balances reaching an all-time historic high. Across banks, thrifts and credit unions, the average consumer checking balance has increased in 24 of the past 30 quarters.

“ ‘The true significance of the consumer maintaining the highest checking account balance in the history of the United States is economic uncertainty still prevails.’ ” — —Michael Moebs, economist and chief executive of Moebs Services

Consumers maintained a historically high average checking account balance for year-end June 30, 2018 at $3,673 for all financial institutions, Moebs said Wednesday. Banking consumers reduced checking balances by 1.8% while members at credit unions increased those balances by 3%, and customers at savings and loans associations increased their checking account balances by 20.7%.

Americans are warehousing more checking dollars because they are still are very leery of the economy, said Michael Moebs, economist and chief executive of Moebs Services. “The true significance of the consumer maintaining the highest checking account balance in the history of the United States is economic uncertainty still prevails.”

The recent stock market volatility is unlikely to help. On Wednesday, the Dow Jones Industrial Average DJIA, +0.16% plunged 831.83 points, or 3.2%, to 25,598.74; the S&P 500 SPX, -0.17% index fell 94.66 points, or 3.3%, to 2,785.68; and the Nasdaq Composite Index COMP, -0.60% dropped by 315.97 points, or 4.1%, to 7,422.05, its biggest decline of 2018.

When times are good, Americans feel confident by keeping very little in checking, but when times are difficult consumers store money in checking accounts, effectively pulling back on spending on retail and restaurants, Moebs said. The median amount in checking accounts since 1991 is $2,263. “Anything above this indicates the economy is not doing well,” he said.

Consumers had the least amount of money in their checking accounts in 2007, when times were good just before the Great Recession. In fact, they had on average less than $1,000 in their account. Since 2008, the checking account customer has been hoarding more money. “Yet, the Federal Reserve keeps raising interest rates,” Moebs said.

“Wall Street may be doing well, but American consumers have not fully participated in retail goods or services spending since the Great Recession — buying only what they need and stockpiling the rest in their checking accounts,” he said. “In fact, for many consumer households the Great Recession of 2008-2009 is not over.”

Source: FDIC & NCUA CALL Reports & Moebs Services, Inc. © 2017

Yet credit-card debt hit $1 trillion, so what’s going on? The Dow Jones Industrial Average DJIA, +0.16% has been on a rollercoaster ride in recent months. The S&P 500 index SPX, -0.17% and Nasdaq Composite Index COMP, -0.60% also experienced volatility as the 10-year year Treasury yield reached a seven-year high above 3.25%.

Stock market volatility and uncertainty make consumers and investors nervous. Higher yields make bonds more attractive for some investors, and they’re considered a safer asset than stocks, especially in times of intense market volatility, analysts say. The world’s asset prices, the rates of borrowing and movement in currencies are also influenced by U.S. government bonds.

“ Free checking often requires more funds. In cities where a large number of people are ‘fully banked,’ free checking accounts are offered 65% of the time. ”

Free checking often requires more funds. In cities where a large percentage of people are “fully banked,” free checking accounts are offered 65% of the time, Moebs found, but are only offered half the time in cities where a smaller percentage of people are fully banked. In January, Bank of America BAC, +0.45% said it would eliminate free checking for customers with low balances.

Of course, the most fortunate young Americans have been boasting about their $1 million 401(k) balances. But there’s a sizeable number who have seen a savings bump in recent years. Nearly half (47%) of working millennials have $15,000 or more in savings and 16% have $100,000 or more in savings, according to Bank of America, which surveyed 2,000 millennials aged 23 to 37.

The bank asked about the total amount of savings, including bank savings/checking accounts, IRA, 401(k) and other retirement or investment accounts. A nine-year bull market has clearly helped. That’s an encouraging improvement for a generation saddled with record student loan debt. But Moebs said people hoarding money in checking accounts is a cause for concern.

(This story was updated on Oct. 10, 2018.)