Low-Income Consumer Stress Warning

Major US banks are warning of stress among low-income consumers as they grapple with dwindling savings and rising prices.

How writes Financial Times, the warning from the largest American banks JPMorgan Chase, Citigroup, Wells Fargo and BNY was made based on the results of the second quarter of this year.

Three of the four largest US banks by assets and BNY reported a decline in lending revenue as business stagnated after huge gains from the Federal Reserve's rate-hike cycle.

Consumer sentiment remains “stubbornly subdued” and fell to an eight-month low of 66 points.

Citi's U.S. consumer lending profits have fallen 74% from a year ago. The bank's chief financial officer, Mark Mason, said consumer spending is slowing overall and account balances are lower than they were before Covid. He added that American consumers are more cautious than ever before.

Jeremy Barnum, JPMorgan's chief financial officer, said the bank “generally believes consumers are doing well” but pointed to weakness among less affluent clients.

BNY Chief Executive Robin Vince warned that “inflation is very painful for many people,” especially those who do not have savings.

Bankers' concerns about low-income Americans echo Pepsi's warning Thursday that its North American sales were hurt by the impact of years of inflation on low-income consumers.

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