Despite everything, Americans\u2019 finances are still sturdy. At least that\u2019s the view of people\u2019s wallets from some of the country\u2019s biggest banks as corporate earnings season gets rolling with profit beats.<\/p>\n
\u201cWe\u2019re trying to be really clear here. The consumer is in good shape,\u201d said JPMorgan Chase & Co. Dimon added, \u201ceven if we go to a recession, they\u2019re going with rather good conditions, low borrowings and good house price values still. But the headwinds are substantial and somewhat unprecedented.\u201d<\/p>\n Over at Wells Fargo \u201cI\u2019d say we\u2019re seeing a more cautious consumer but not necessarily a recessionary one,\u201d Citi There\u2019s reasons to think many Americans would disagree with these upbeat \u2014 albeit guarded \u2014 assessments on their financial wellbeing.<\/p>\n Consumer debt is rising while the food and rent costs that were pushed higher by inflation in the past two years likely aren\u2019t getting punctured. Many Americans still haven\u2019t tucked away money for emergency savings. And don\u2019t forget, student loan payments are returning in October to stretch the budgets of more than 40 million borrowers. <\/p>\n Both things are true, said Ida Rademacher, vice president at the\u00a0Aspen Institute\u00a0and co-executive director of the Aspen Financial Security Program.<\/p>\n \u201cThe economy is doing surprisingly well and many people in the economy are doing surprisingly well \u2014 and at the same time, many people in the economy are continuing to make trade-offs in their everyday lives to manage to stay afloat,\u201d she said. <\/p>\n Over one-third, 35%, of people told Federal Reserve researchers they were worse off in 2022 compared to a year earlier, Rademacher noted. That\u2019s the largest share since Fed researchers started asking the question nearly a decade ago.<\/p>\n The disconnect happens when trying to identify one single trend about Americans\u2019 money when their financial lives can be so different now, Rademacher said.<\/p>\n \u201cThe idea that there\u2019s an average consumer is a myth,\u201d she said. In fact, \u201cthe \u2018average\u2019 is one the greatest last-standing American myths at the moment,\u201d she later added. <\/p>\n There\u2019s only so much that corporate earnings can show, she said. \u201cThe overall ways that we measure economic health and performance of the economy is now so separate than the ways that we measure the economic health and performance of a household.\u201d <\/p>\n Here\u2019s the measures that many people are watching when they decide if they are in a good position \u2014 or not. <\/p>\n Credit card debt<\/strong><\/p>\n Credit card balances stuck at $968 billion during the first quarter, according to the Federal Reserve Bank of New York. The first quarter is usually when Americans pay off the credit card debt that accumulates in the back end of the year, capped by holiday spending. But the collective balances didn\u2019t decline from quarter to quarter for the first time in over two decades, researchers said.<\/p>\n While aggregate balances aren\u2019t declining, the APRs for the balances are increasing due to rising interest rates. The average rate on a new credit card offer was 24.06% in June, up from 23.98% in May, according to LendingTree.<\/p>\n Inflation<\/strong><\/p>\n Inflation rates are coming off their four-decade high. New data this week showed inflation rates dropping to 3% in June year over year. But one problem could be nudging those inflation rates even lower, economists say.<\/p>\n It\u2019s unlikely prices will decrease for many grocery store items, food industry experts said. Rents will \u201calmost definitely\u201d not revert to pre-pandemic levels, one economist at Zillow Savings<\/strong><\/p>\n \u201cConsumers are slowly using up their cash buffers,\u201d Dimon said in a statement with the second quarter earnings results.<\/p>\n For many people, the buffers haven\u2019t been big enough to build emergency savings. Just under half (48%) of people polled on their emergency savings said they had enough to cover three months of costs, according to a Bankrate survey last month. That\u2019s flat from a year earlier. Meanwhile, 57% said they were uncomfortable with the amount of money they did have for a rainy day.<\/p>\n Student loans<\/strong><\/p>\n Federal student loan payments are going to come back in October, and without large scale loan forgiveness. The Supreme Court said the Biden administration overstepped its power with the cancellation order.<\/p>\n The administration argued there would a rise in defaults and delinquencies without cancellation, and it\u2019s applying a one-year grace period to shield borrowers from collections and credit score dings.<\/p>\n It\u2019s been more than three years since people had to pay their federal student loans.<\/p>\n Sides can argue on the merits of loan forgiveness, but there\u2019s \u201clittle doubt\u201d cancellation could have boosted the ability of many borrowers to build their wealth, said Adam Kamins, a regional economist for Moody\u2019s Analytics. \u201cThese are uncertain times for those who borrowed from the government to fund their post-secondary educations,\u201d he said in a Friday note.<\/p>\n See<\/strong>: Is now a good time to refinance your student loans? You could save money, but tread carefully.<\/p>\n To be clear, bankers aren\u2019t playing Pollyanna. Bracing for foreseen and unforeseen financial risks are a core part of the banking business. The pending risks and unknowns include the continuing effects of Russia\u2019s invasion of Ukraine and the consequences of together monetary policy, Dimon said Friday.<\/p>\n So when bankers voice a vote of confidence for the consumer, that\u2019s no small thing. And they also remember consumers\u2019 financial conditions before the pandemic.<\/p>\n For example, JPMorgan saw a double-digit percentage gain in outstanding credit card balances. But the activity was \u201cnormalization, not deterioration,\u201d Jeremy Barnum, JPMorgan\u2019s chief financial officer said on the Friday earnings call.<\/p>\n There\u2019s also the bullish view beyond bank balance sheets.<\/p>\n The jobless rate fell to 3.6% in June and the economy added 209,000 new jobs, the Bureau of Labor Statistics said last week. While just a little under the consensus forecast for 240,000 new jobs, many economists cheered the report.<\/p>\n The numbers could be interpreted as a sign the economy was cooling down without crashing and didn\u2019t need too many more Federal Reserve interest rate increases, they said.<\/p>\n \u201cLabor market performance is great, but it doesn\u2019t completely transfer into how people\u2019s \u00a0financial security is,\u201d said Rademacher. <\/p>\n
\n JPM,
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\n CEO Jamie Dimon, speaking on a Friday earnings call after a second quarter profit beat from the nation\u2019s largest bank. \u201cThey\u2019re spending down their excess cash. That\u2019s all tailwinds.\u201d<\/p>\n
\n WFC,
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\n CEO Charlie Scharf said \u201cThe U.S. economy continues to perform better than many had expected. Although there will likely be continued economic slowing and uncertainty remains, it is quite possible the range of scenarios will narrow over the next few quarters.\u201d<\/p>\n
\n C,
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\n CEO Jane Fraser said in a Friday earnings call.<\/p>\n
\n Z,
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\n said.<\/p>\n\u2018Normalization not deterioration\u2019<\/h2>\n