US consumers and businesses are holding up despite high interest rates. Third-quarter results from JPMorgan Chase, Wells Fargo and Citigroup showed that the US economy remained resilient even as borrowing costs stayed high.
Spending and lending continued to grow compared with the same period last year, while loan losses remained largely under control.
The bank’s consumer loan balances increased by 4% compared with a year earlier. Its credit card charge-off rate also declined to 3.73% from 4.02%, pointing to an improvement in this measure of credit losses. Wells Fargo reported growth in consumer loans and lower credit card losses .
Citigroup reported an 11% rise in US card spending. Spending on US credit cards increased by 11% compared with the same period last year. The bank’s credit card charge-off rate also improved, falling to 3.6% from 4.0% a year earlier, according to Yahoo Finance.
Wells Fargo CEO Charlie Scharf said customers remained financially healthy. Scharf said investment in artificial intelligence infrastructure , high employment levels and wage growth continued to outweigh risks from higher interest rates, rising oil prices and inflation. Along with higher refinancing costs, he said wider credit spreads could add to financial pressure. Wider spreads can make borrowing more expensive for businesses and other borrowers, according to Yahoo Finance.
He pointed to higher consumer spending, low loan delinquencies and growth in deposit and investment balances as signs of financial strength. These factors were helping support consumers and businesses despite economic pressures, as quoted by Yahoo Finance. JPMorgan CEO Jamie Dimon warned that another rate increase could hurt borrowers. Dimon struck a more cautious tone during a call with reporters. He warned that a further one-percentage-point rise in interest rates could be particularly painful for borrowers who need to refinance their debt at higher costs. Dimon also warned about widening credit spreads. Credit spreads are the difference between the interest rates charged on riskier debt and those on safer debt.
Speaking on Tuesday, Scharf said the bank’s data showed that consumer and business customers were doing well.
