Despite Americans seemingly being mired in an affordability crisis, the nation's largest banks are not feeling the pressure. Consumer spending is increasing, households are both saving and investing, and losses on bad credit card debt are declining. This creates a puzzle when contrasted with the negative sentiment in surveys and persistent complaints about high prices, yet from the lenders' perspective, the economic outlook appears robust, at least through 2026. This was the message conveyed this week in the fourth-quarter earnings reports from Bank of America (BAC.US), Citigroup (C.US), JPMorgan Chase (JPM.US), and Wells Fargo (WFC.US). Executives from each institution stated that households and small businesses have remained resilient. These banks have been monitoring for any signs of deterioration but have not observed any so far.
JPMorgan Chase CEO Jamie Dimon said on Tuesday that the outlook for the next 6 to 12 months looks quite positive. "The consumer has money," he stated, "and while there's a little softness in the job market, jobs are still there. There is also a massive amount of stimulus money coming in from the 'Great Beautiful Act'." Bank of America Chief Financial Officer Alastair Borthwick added on Wednesday that the consumer is in "excellent shape." Even as the overall economy's savings rate begins to decline, Borthwick noted no signs of people increasing borrowing or depleting savings just to get by. By the end of 2025, investment assets held by Bank of America's retail clients had grown by 16% to approximately $600 billion, primarily driven by $19 billion in inflows throughout the year. "Consumers are still spending more, which is consistent with economic growth," Borthwick further commented.
Providing support for this view, U.S. retail sales data for November, released on Wednesday, showed the strongest growth since July, fueled by a rebound in auto purchases and holiday shopping. Offering a third perspective, Wells Fargo CEO Charlie Scharf detailed the alternative early indicators his bank monitors to detect potential problems. "We look at things like checking accounts that include unemployment benefits flows, direct deposit amounts, overdraft activity, and payment outflows, and we are not observing a major shift in trends," he said.
So, what exactly is happening? There is no doubt that affordability is a widespread issue in certain areas—such as housing and healthcare. In other sectors like food and gasoline, prices remain significantly higher than pre-pandemic levels due to past inflation. This has had a lasting impact on how people perceive their spending. Simultaneously, those with the lowest incomes—many of whom are not even customers of the major banks—are experiencing real pressure. According to the New York Fed's Consumer Credit Panel, the proportion of borrowers nationwide with credit card debt delinquent for over 90 days jumped from less than 8% at the end of 2022 to over 12% by the end of last year. Delinquency rates on auto loans have also risen.
However, this has not translated into substantial pain for the large banks. For these institutions, credit card delinquency rates have not worsened; in fact, the actual losses from bad debt as a percentage of total balances decreased for these lenders in 2025. Even for specialized credit card companies like Capital One and Synchrony Financial, which have yet to report Q4 figures, net charge-off rates are expected to rise only marginally and remain significantly below the levels seen at the end of 2024. U.S. President Trump has set his sights on large corporations that own rental properties and high credit card interest rates as popular-sounding measures to alleviate affordability complaints. Most large banks strongly oppose this.
Admittedly, part of the reason is the severe impact it would have on their profits, but the banking industry also argues it could lead to a contraction in credit, especially for the riskiest borrowers. "This would limit access to capital for those who need credit the most and have a harmful effect on the economy," said Citigroup CFO Mark Mason. JPMorgan has taken the hardest line against this potential policy—though it remains speculative and vaguely defined—stating the bank would consider all means to fight back, including litigation.
When smaller U.S. banks begin reporting their earnings later this month, the market might see more signs of consumer stress emerging. However, as long as the unemployment rate remains contained, this pressure seems unlikely to deepen significantly. While affordability may be a real crisis for some and a persistent "price shock" a problem for others, for the banks, American consumption appears destined to continue driving the economy—and their profits—forward.
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