The State Of The American Consumer, As Told By Their Bankers

Despite weak consumer sentiment, an uptick in household debt delinquencies, and anecdotal reports of financial distress, the overarching narrative remains that consumers as a whole are healthy, and they are spending.

This is important because personal consumption accounts for about 70% of GDP.

On Thursday, we learned monthly retail sales grew 0.6% in June to $720 billion. This metric is hovering near record highs.

This trend was confirmed last week by America's largest banks, which know exactly how much money people have, how much they're spending, and how they're paying for it.

"The consumer basically seems to be fine," JPMorgan Chase CFO Jeremy Barnum told analysts on Tuesday. "You see a little bit more stress in the lower income bands than you see in the higher income bands. But that's always true. That’s pretty much definitionally true. And nothing there is out of line with our expectations."

Barnum acknowledged concerns about debt delinquencies but argued there was little cause for alarm.

"Consumer credit is primarily about the labor market," he explained. "In a world with a 4.1% unemployment rate, it's just going to be hard, especially in our portfolio, to see a lot of weakness."

The state of consumer spending can be described as cooling, but also "still positive” and "still growing," Barnum said.

Other banks echoed that sentiment while addressing their second-quarter profits, which beat analysts' forecasts.

“Consumer health remains very strong,” Citigroup CFO Mark Mason said. “We do anticipate further consumer [spending] cooling in the second half as … tariff effects play through.”

JPMorgan's debit and credit card spending volume in Q2 was up 7% from last year. Citi's branded credit card spending volume increased by 4%. Bank of America said its credit and debit card spending was up 4%. Wells Fargo's purchase volume was up 4% for its debit cards and 8% for its credit cards.

"Consumers remained resilient, with healthy spending and asset quality," BofA CEO Brian Moynihan said.

“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 said.

The big picture 🖼️

Card spending data from early July shows that consumers continue to spend at a healthy clip.

Just because consumers have been resilient doesn't mean they'll remain resilient.

As we've been discussing for months, the economic data, while growing, continues to cool.

This doesn't mean the economy is doomed to fall into a recession. Rather, it's just an acknowledgement and recognition that it has gotten harder to argue that growth is destiny.

For now, we'll just have to keep watching the data — especially the hard data. Because so far, the economy continues to hold up, supported by healthy consumer spending.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.