Banking Giants Say Consumer Spending Remains Resilient Despite Inflation

America’s biggest banks say consumers are still spending in spite of inflation.

As Reuters reported Friday (Oct. 11), earnings from two of the country’s biggest banks — and optimistic commentary from their executives — could make investors less worried that high borrowing costs were pressuring consumers and leading to a possible downturn.

“Overall, we see the spending patterns as being sort of solid,” said Jeremy Barnum, chief financial officer of JPMorgan, who added that spending patterns had returned to normal following a post-COVID bounce, when consumers spent heavily on travel and restaurants.

“We’re getting to the point where it no longer makes sense to talk about the pandemic,” he said. “One of the things that you had was that heavy rotation into T&E [travel and entertainment] as people did a lot of traveling, and they booked cruises that they hadn’t done before, and everyone was going out to dinner a lot.”

Barnum told analysts spending patterns were “consistent with the narrative that consumers are on solid footing and consistent with a strong labor market and the current central case of a kind of ‘no-landing’ scenario economically.”

Meanwhile, Michael Santomassimo, Wells Fargo’s finance chief, told reporters that spending on credit and debit cards, while down a little from earlier this year, was still “quite solid.”

And as PYMNTS reported last week, Wells Fargo CEO Charlie Scharf said that the lender has not seen changes in delinquencies or spending that would signal faltering consumer health, but it has witnessed stress among lower-income consumers.

“We continue to see more pronounced stress in certain customer segments with lower deposit and asset levels where inflation has partially offset strong employment and wage growth,” Scharf said during the call. “The benefits of inflation slowing and interest rates starting to ease should be helpful to all customers, but especially those on the lower end of the income scale.”

However, the Bureau of Labor Statistics’s most recent Consumer Price Index data shows some continued pressures on consumers, with the real cost of food — and to a lesser extent, shelter — remaining “sticky and stubbornly high,” as PYMNTS wrote last week.

Past data from PYMNTS Intelligence shows that the essential spending on food and shelter can eat up large portions of the paychecks — a respective 25% and 37% — of the households making less than $50,000 per year. For households making more than that, the situation is far less severe, at a cumulative 25% of take-home pay.