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By Elizabeth Dilts Marshall
NEW YORK, July 19 (Reuters) - Americans' financial health held up well in the second quarter even as inflation sent gas and grocery bills higher and ate into savings for the first time since the pandemic, U.S. bank executives said.
Second quarter spending and deposit data from the country's largest lenders including JPMorgan Chase & Co, Bank of America Corp. and Wells Fargo & Co has shed new light on the health of U.S. consumers - a key indicator that offers clues on the likelihood of an economic recession.
U.S. consumer prices jumped 9.1% in June, the largest increase in more than four decades, with gas surging 11.2%. Runaway inflation has led the Federal Reserve to hike rates, increasing borrowing costs and sparking recession fears.
Still, bank executives across the board said consumers - who were mostly able to boost savings during the coronavirus pandemic - were financially healthy, as evidenced by strong spending and few signs of credit deterioration.
"Consumers are in good shape. They're spending money. They have more income," Jamie Dimon, chief executive of the country's largest lender JPMorgan, told analysts last week.
Combined debit and credit card spending rose 15% from the second quarter of 2021, JPMorgan reported on Thursday, while Bank of America, the second-largest U.S. bank, said credit and debit card spending rose 10% on last year.
Overall, Bank of America customers spent $1.1 trillion from April through June, making it a record spending period for the bank, said Chief Executive Officer Brian Moynihan on Monday, adding consumers are "quite resilient."
Citigroup CEO Jane Fraser said little in the data suggested the country was on the verge of a recession.
"It's just an unusual situation to be entering into this choppy environment when you have a consumer with strong health," said Fraser.
While data this month showed the U.S. economy added more jobs than expected in June, it could still be on the verge of a recession after gross domestic product contracted in the first quarter.
STRONG CREDIT QUALITY
Executives said growth in consumer spending will likely slow in the second half of the year as inflation, as high interest rates and economic fears weigh on consumer confidence. They also noted the impact of inflation could be seen in the data. "We see the impact of inflation and higher non-discretionary spend across income segments," said JPMorgan's Chief Financial Officer Jeremy Barnum. "The average consumer is spending 35% more year-on-year on gas and approximately 6% more on recurring bills and other non-discretionary categories."