The U.S. money centers reported earnings last week and vividly demonstrated how much the pandemic had changed the U.S. consumers' balance sheet. The U.S. consumers have significantly more deposits and much fewer loans compared to the pre-pandemic level. For example, BAC/JPM/WFC saw a 35%/47%/30% jump in their consumer deposits since Q4'19. In the meanwhile, consumer loans declined -8.9%/-6.9%/-15.7% respectively. Net charge-offs are also at best in decades. By and large, consumer deleveraging is the dominating phenomenon across the entire U.S. banking industry.
Some investors might worry that tepid loan growth implies fewer activities, therefore, slower economic growth. Bank CEOs disagree. Brian Moynihan commented that consumer spending was actually up 22% compared to the 2019 level as they just spent their savings instead of using credit. However, there are encouraging signs that certain pockets of consumer credits are picking up, such as credit cards and auto loans.
"Consumer spending from our own BAC customers is notably 22% higher in the first half of '21 compared to 2019" -- Brian Moynihan, CEO of Bank of America
"The consumer, their house value is up, their stock rises up, their incomes are up, their savings are up, their confidence are up. The pandemic is kind of in the rearview mirror. Hopefully, nothing gets worse with it. And they're ready to go." -- Jamie Dimon, CEO of JP Morgan
"Consumers still have a substantial amount of cash. You see it in overall deposit levels and the willingness to spend as things open up." -- Charles Scharf, CEO of Wells Fargo
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