Major US banks have warned that low-income customers are showing signs of money stress. This is reported by the Financial Times.
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In the second quarter of 2024, JPMorgan Chase, Citigroup, Wells Fargo and BNY warned of consumers struggling with low savings and high prices.
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Government stimulus programs during the COVID-19 pandemic have helped shield Americans from inflation in recent years, but as households spend money, consumers' financial health could play a decisive role in the outcome of November's presidential election.
According to the latest report. According to a University of Michigan survey, consumer sentiment remains “persistently subdued” and has fallen to its lowest point in eight months.
Profit at Citi's US consumer lending business, which includes credit cards, fell 74% from a year ago. The bank's chief financial officer, Mark Mason, said consumer spending overall was slowing and customer account balances were lower than they were before the pandemic.
U.S. consumers were more cautious than before, he added.
“We are not seeing the same growth in consumer spending as in previous quarters. There was less traffic on the marketplaces we work with,” Mason said.
JPMorgan Chief Financial Officer Jeremy Barnum said the bank “generally believes consumers are OK,” but pointed to weakness among less affluent clients.
“In the low-income segment, you're starting to see some evidence a certain rotation of spending from discretionary to non-discretionary,” he noted.
BNY (formerly Bank of New York Mellon) Chief Executive Robin Vince warned that “inflation is very painful for many people,” especially those who do not has savings.
“You can see the first signs that part of the population (without assets to invest in the stock market) has exhausted the reserves they accumulated during the pandemic and is faced with the fact that the general level prices are simply higher,” Vince said.
Bankers' concerns about low-income Americans echoed Pepsi's warning that its sales in North America have been hurt by the impact of years of inflation on low-income consumers.
