Large US banks say consumer finances are healthy despite tariffs
"The consumer basically seems to be fine," JPMorgan CFO Jeremy Barnum said in a call with analysts. The bank set aside $2.85 billion for credit losses in the second quarter, roughly 6.5% less than a year earlier.
JPMorgan Chase (JPM.N), opens new tab, Citigroup (C.N), opens new tab and Wells Fargo (WFC.N), opens new tab posted second-quarter profits that beat analysts' forecasts, helped by a rebound in dealmaking and resilient consumer spending.
"Consumers and businesses remain strong as unemployment remains low and inflation remains in check, credit card spending growth softened very slightly in the second quarter, but is still up year over year," Wells Fargo CEO Charlie Scharf told analysts.
Higher-than-expected repayments in auto loans and credit cards prompted Wells Fargo to reduce its charge-offs, or debts that are unlikely to be recovered. The bank also reduced the amount of money set aside to cover potential loan losses.
Still, executives also expressed concern about how consumers will weather the impact of higher tariffs on imported goods.
U.S. consumer prices increased by the most in five months in June amid higher costs for some goods, suggesting tariffs were starting to have an impact on inflation, the Consumer Price Index showed on Tuesday. It increased 0.3% last month, in line with expectations.
Citigroup anticipates spending will soften in the second half of the year, CEO Mark Mason told reporters.
"Consumer health remains very strong," he said. "We do anticipate further consumer (spending) cooling in the second half as ... tariff effects play through."
The bank's credit costs rose to $2.9 billion in the second quarter, mainly from net credit losses in U.S. credit cards.
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Vegetables which are grown in various places and taken to another country to be mixed and frozen were not substantially transformed, so the mixture must be labelled with the origin of each ingredient. But if sugar, dairy products, and nuts from different countries are made into a cookie, the country of origin is the location where the ingredients are baked or processed. Today's supply chains are much more globalised and complicated. For motor vehicles produced by Ford Motor (F.N), opens new tab, General Motors (GM.N), opens new tab and Stellantis ( opens new tab, origin depends on the value of the contents. To qualify for the United States-Mexico-Canada Agreement, for example, at least 70%, opens new tab of a vehicle producer's steel and aluminum purchases must originate in North America. Tariffs can also vary depending on a product's American content. 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