Maybe....but maybe not....politics....but surely economics.

Firewalled. Can you post it?

Big US banks have warned that lower-income customers are showing signs of financial stress just a few months ahead of the presidential election.

In second-quarter results on Friday, JPMorgan Chase, Citigroup, Wells Fargo and BNY cautioned about consumers grappling with lower savings and higher prices.

Government stimulus programmes during the Covid-19 pandemic helped insulate Americans from inflation in recent years, but as households have spent the money, the financial health of the consumer could play a crucial role in the outcome of November’s presidential vote.

Consumer sentiment remains “stubbornly subdued” and fell to an eight-month low of 66, according to the latest University of Michigan survey released on Friday.

Profits at Citi’s US consumer lending business, which includes credit cards, plunged 74 per cent from a year ago. The bank’s chief financial officer, Mark Mason, said consumer spending was slowing overall, with account balances now lower than they were before Covid.

US consumers were more cautious than they had been in a while, he added. “We are not seeing the same growth in consumer spending that we had in prior quarters,” said Mason. “There was less traffic in the retail venues that we partner with.”

JPMorgan financial chief Jeremy Barnum said the bank’s “broad take is that the consumer is fine” but pointed to weakness among less affluent customers.

“In the lower-income segment, you start to see a little bit of evidence of some rotation in the spending out of discretionary into non-discretionary,” he said, noting that it was “traditionally . . . understood to be a little bit of a sign of weakness”.

BNY chief executive Robin Vince warned that “inflation is very painful to many people”, particularly those without savings.

“You can see the early signs of that portion of the population [who do not have assets to invest in the stock market] having depleted the reserves they had built up through the pandemic and are confronting the fact that the overall level of prices is just higher,” Vince said.

The bankers’ concerns about lower-income Americans echoed a warning from Pepsi on Thursday that its North American sales volumes were being hit by the impact of multiple years of inflation on lower-income consumers.

There is “some perception and some reality in a lot of households that food is expensive”, PepsiCo chief executive Ramon Laguarta told analysts. Consumers are having to make “a lot of decisions around how they spend their money”.

JPMorgan, Citi and Wells — three of the four largest US banks by assets — as well as BNY reported lower income from lending, as the business has plateaued following enormous gains from the Federal Reserve’s cycle of interest rate rises.

Large banks benefited from being able to charge higher rates for loans but did not immediately need to reward depositors with higher savings rates, boosting profits. But gradually, banks are increasing the rates they pay to account holders.


Wells said lending demand was “tepid” from individual and corporate clients, and lowered its outlook for loan profits for the rest of the year.

“When you look below the surface and really dig into what is happening across differing consumers, you see that the lower-income folks are struggling,” said Wells chief financial officer Mike Santomassimo.

The industry’s brightest spot was in investment banking, adding to hopes for a sustained rebound in dealmaking activity as Wall Street weathered the quarter considerably better than Main Street.

JPMorgan said investment banking fees increased by 50 per cent to $2.4bn, even better than the bank’s own guidance to investors last month. At Citi, investment banking fees rose 60 per cent from a year ago to $853mn in the quarter.

Across the bank, JPMorgan’s profits reached a record high in the second quarter at just over $18bn, a 25 per cent increase from a year earlier.

But stripping out one-off effects, including a gain of almost $8bn from its stake in the credit card company Visa, net income was up less than 1 per cent from a year earlier in the second quarter.


Citi said quarterly profits rose 10 per cent from last year to $3.2bn, driven by the investment banking business and cost cutting.

The bank, which is in the middle of its largest restructuring in years, eliminated 8,000 jobs in the quarter.

Wells, which has a smaller investment bank than rivals, reported a 0.6 per cent drop in profits to $4.9bn, while BNY, which is less exposed to lower-income consumers because of its specialisations in money management and custody, beat analysts’ expectations for revenue and net income.

Shares of JPMorgan, Citi and Wells were down in morning trading in New York on Friday, while BNY was up more than 3 per cent.

According to the present administration everything is better than it has ever been.

But, but going shopping for anything seems to prove otherwise.