I just finished an earnings media conference call with JPMorgan (JPM) CFO Jeremy Burnham (thanks to Yahoo Finance banking reporter David Hollerith for answering my question before mine did).
Our exchange is as follows:
myself: Cautious results from a range of consumer companies, including PepsiCo (PEP), have raised consumer concerns this week. Looking at the debit and credit data, is there anything that suggests consumers are holding back on purchases, such as inflation or election concerns?
Burnham: The short answer is no. I’ve made this point many times before and I’ll say it again. The big picture is that real consumer spending is trending sideways. Spending growth is picking up steam, but we’re not seeing any meaningful weakness. You can always take a closer look with a magnifying glass, like with this data. One thing we’re starting to see a little bit in the spending patterns of lower-income people is that we’re starting to see a little bit of a rotation between discretionary and non-discretionary spending. This has traditionally been seen as a sign of weakness, for obvious reasons.
But in a world where unemployment is at 4.1% and GDP growth is slowing somewhat, the data that we’re seeing on the consumer side is entirely consistent with that economic environment, and the overall backdrop — spending, loan loss reserves, delinquency rates, cash buffers — is still consistent with a very healthy consumer. It’s not a concern at this point.
Points to note: Interestingly, JPMorgan CEO Jamie Dimon was not on the call as usual, reportedly due to a travel conflict as he was returning from an event in Germany. In response to a reporter’s question about Dimon’s absence, Burnham said, “There’s nothing more to read into it.”
