Solid U.S. Consumer Spending Boosts Major Banks Despite Inflation Woes

U.S. consumer spending remained strong in the third quarter as major banks JPMorgan Chase and Wells Fargo reported solid earnings. Despite concerns over inflation, spending patterns have stabilized, driven by higher-income consumers. However, lower-income individuals face challenges, prompting banks to monitor potential credit card loan losses.

Amidst economic uncertainty, U.S. consumer spending demonstrated resilience in the third quarter, according to reports from major banks JPMorgan Chase and Wells Fargo. Their earnings dispelled some investor concerns of elevated borrowing costs leading to an economic downturn, even as JPMorgan adjusted provisions for potential soured loans.

JPMorgan's chief financial officer, Jeremy Barnum, observed normalized spending post-pandemic. Addressing fears of a recession due to Federal Reserve interest hikes, he maintained that consumer spending remained robust, excluding potential economic 'hard landings.'

While spending on credit and debit cards remained solid, few concerns over higher inflation impacting lower incomes were voiced. Wells Fargo noted potential credit card loan losses observed among lower-income groups, though higher-net-worth consumers seemed less affected, maintaining a normalization trend in the economy.

(With inputs from agencies.)