Signals from Wall Street's "Big Four" Banks’ Earnings: Unexpected Stability in U.S. Consumption

The latest quarterly reports from the four largest banks in the United States have sent an unexpected signal: Despite geopolitical conflicts driving up oil prices and sharp fluctuations in the stock market, American consumers' financial conditions remain robust.

JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo all released their first-quarter results this week, showing that consumer credit quality and spending have continued to display healthy trends.

JPMorgan Chase Chief Financial Officer Jeremy Barnum stated during an analyst conference call that the U.S. economy is "unexpectedly resilient," and so are its consumers. "The story remains the same: a highly resilient consumer, who continues to perform well despite higher oil prices."

Jefferies analyst John Hecht believes the earnings results of the Big Four banks are a positive signal for payment companies, including American Express, which will report earnings later this month.

Bank Executives Unanimously Say: Consumers Are "Resilient"

"Resilience" has become the keyword repeatedly cited by bank executives this week when describing their customers' situation.

Barnum stated in the conference call that JPMorgan Chase examined consumer conditions from multiple perspectives, including early delinquency roll rates, default rates, cash buffers, overall spending, discretionary spending, and non-discretionary spending, "All indicators are consistent with previous trends, and fundamentals are healthy."

He also cautioned about risks: If the labor market weakens and the Middle East conflict persists, it would have cascading effects. But for now, there are no obvious signs of deterioration in consumer conditions.

Credit Quality Improves, Spending Patterns Remain Stable

Looking at the data, the spending patterns and balance growth of the Big Four banks' credit card businesses remain "constructive."

Jefferies analyst John Hecht pointed out that compared to a year ago, delinquency rates and net charge-off rates at each bank have improved—these two indicators are key references for assessing credit quality. Hecht wrote in a report on Wednesday that bank performance "supports our judgment that borrower conditions remain stable, despite ongoing macro uncertainty. Spending trends have been boosted to some extent by higher tax refund amounts."

The first quarter was not without turbulence. The U.S.-Iran war drove up gasoline prices, reigniting inflation concerns; sharp stock market volatility also suppressed borrower confidence. However, these external shocks have yet to leave a noticeable mark on consumer data.