MW You may feel stressed about money, but the big banks say you're not acting like it

By Steve Gelsi

JPMorgan's CFO says while there's a lot of uncertainty and the economy has slowed, 'the facts say' consumers and the economy are just fine

Despite jitters over tariffs and other headwinds, banks said consumer spending remains relatively strong.

The country's largest banks in recent days have shared fresh evidence of U.S. economic strength, which powered bigger-than-expected third-quarter profits, showing consumers spent and borrowed at a brisk pace despite worries over inflation and signs the job market was slowing.

This week's bank earnings reports were welcomed by market watchers, as there has been a dearth of data on the economy due to the government shutdown. The S&P 500 index SPX has gained 1.4% this week through Wednesday, and remains within range of last week's record close.

If there was a caveat to numbers that showed the economy, and the labor market, were healthy, it was that the economy was fine for only 70% of Americans - or those with higher incomes.

"[T]here's nothing I'm looking at right now that gives me any pause. When I look at the health of the actual U.S. consumer, it's also very, very stable," said Brendan Coughlin, president of Citizens Financial Group Inc. (CFG), according to a FactSet transcript of a post-earnings call with analysts. "You have to really de-average it to see stress."

That stress was in the bottom 20% to 30% of income earners, Coughlin said. The reason that didn't give the executive pause? "We just don't typically lend to those customers."

There have been some signs that economic growth has slowed, and that the labor market has softened. But as Bank of America Corp. (BAC) Chief Financial Officer Alastair Borthwick noted, unemployment is still low, the stock market is at or near record highs, home prices are holding up and wage growth has continued.

"The consumer is spending more," Borthwick said. "While [the media] may ask how they're feeling, we tend to see how they're spending, and right now the performance of credit cards is quite good."

Also read: Bank of America is beating rivals with this strategy, and it's not costing that much

Regarding uncertainties over how tariffs would impact inflation and corporate profitability, those worries have tapered off as time has passed.

"As we've seen more certainty now around trade and tariffs, and around taxes as well, it's allowed our client base to make longer-term decisions, and that's reflected in our investment-banking activity," Borthwick said.

That's not to say banks don't see anything on the horizon that could derail growth. It's just that at the moment, there are no signs that a weakening is imminent.

"If there's a problem, it's just uncertainty and the worry that things can get worse," said JPMorgan Chase & Co. $(JPM)$ Financial Chief Jeremy Barnum. "But as of now, the facts say the economy may be slowing, but the consumer is OK and the labor market is fine."

He acknowledged that the labor market was in a bit of a "lower hiring, low firing" rut, and he can imagine a scenario where it deteriorates and starts weighing on consumer credit. But for now, there is nothing to suggest that employment levels are at a "tipping point."

On Wednesday, Bank of America reported an improvement in consumer credit metrics, with the bank lowering the amount of money it sets aside for bad loans. Some other banks did the same on Tuesday.

PNC Financial Services Group Inc. $(PNC)$ Chief Executive William Demchak said Wednesday that credit quality remains strong, the economy is sound and companies are worrying less.

"While there are obvious potential downside risks to the U.S. economy, our customers remain on solid footing from a consumer perspective," Demchak said, according to a FactSet transcript. "Spending has been remarkably resilient across all segments, and corporate clients are expressing cautious optimism about their business outlook."

Of course, that doesn't mean banks, and investors, should dispel concerns that the economy will keep slowing, and eventually contract. Goldman Sachs Group Inc. $(GS)$ CEO David Solomon said while the market environment has been improving, he can't help but be cautious.

"We know that conditions can change quickly, and so we remain focused on strong risk management," Solomon said.

Read: Jamie Dimon warns, 'When you see one cockroach, there are probably more,' after Tricolor loan loss.

That's a view that seems to be held by Federal Reserve Chair Jerome Powell, who indicated Tuesday that more interest-rate cuts may be coming as he expressed some concern about the labor market.

And it's not like the economy is working well for everyone - just most people.

"We really are in a two-speed economy," meaning lower-income people are struggling to pay for essentials such as food and housing while higher-income people are doing OK, Cleveland Fed President Beth Hammack said recently.

Greg Robb contributed.

-Steve Gelsi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

October 15, 2025 17:06 ET (21:06 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.