U.S. consumer spending defies inflationary fears
U.S. consumer: While Americans express growing anxiety about inflation and economic instability, major banks reveal a different reality. Bank of America and Citigroup reported on Tuesday that consumer spending rose modestly in the first quarter, just as concerns about tariffs and global uncertainty intensified.
Banks Report Increase in Consumer Spending
Bank of America and Citigroup reported on Tuesday a modest increase in consumer spending during the first quarter. This rise came amid mounting concerns over tariffs and other economic uncertainties. JPMorgan Chase also noted a recent uptick in credit and debit card transactions.
Resilience Amid Tariff Threats
Executives indicated that spending remained strong even after the quarter ended, despite President Trump escalating tariff threats during the so-called “Liberation Day.” According to JPMorgan, some consumers may have brought forward purchases to avoid potential price hikes.
“The Foundation of the Economy”
Consumers continue spending steadily, forming the core strength of the U.S. economy, according to Alastair Borthwick, Bank of America’s CFO. He emphasized that persistent consumer activity remains crucial for maintaining economic momentum and overall financial health across national markets and sectors. Borthwick also noted that economic indicators currently suggest resilience, pointing to ongoing growth and stability despite potential headwinds or uncertainties. This optimism reflects confidence in the economy’s foundation, driven primarily by robust consumer behavior and sustained purchasing power nationwide.
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Recession Fears Persist
Trump’s new tariffs heightened recession concerns, sparking intense market volatility and unsettling investors across industries, particularly in manufacturing and tech. A major consumer confidence index reported a dramatic decline in April, signaling rising anxiety about inflation and future economic stability. Analysts warn that persistent trade tensions may further erode consumer sentiment and business investment, compounding existing economic vulnerabilities. As uncertainty grows, policymakers face mounting pressure to implement stabilizing measures and restore confidence amid fluctuating global financial conditions.
Wall Street in Cautious Mode
Wall Street executives warned that the government’s economic policies could lead the country into a slowdown. By the end of the first quarter, the S&P 500 was already showing signs of decline due to political uncertainty.
Banks Show Financial Strength
Despite the uncertain outlook, banks reported no signs of financial stress among consumers and did not increase provisions for potential defaults. Bank of America posted a net profit of $7.4 billion, an 11% increase. Its revenue rose 6%, driven by financial markets and wealth management.
Fewer Delinquent Loans
The bank also revealed a slight decrease in the proportion of delinquent loans compared to the previous quarter, reinforcing the picture of financial stability.
