American wallets are being hit from multiple sides — by rising prices, higher interest rates, and record levels of household debt.
As inflation ticked back up to 2.7 percent this week, the highest since February, consumers keep swiping their cards and borrowing more just to stay afloat.
Meanwhile, some of the nation’s biggest banks are raking in massive profits, thanks in large part to that increasing inflation.
JPMorgan, Citigroup, PNC, and Bank of America all posted stronger-than-expected earnings this week, citing gains in interest income.
Bank of America led the charge with $7.1 billion in profit, fueled by a record $14.7 billion in net interest income and a 15 percent jump in trading revenue.
Other major consumer lenders, like PNC and Citigroup, also posted billion-dollar profits on interest payments.
Americans have been tapping and swiping their credit cards at an increasing clip to keep up with rising costs across dozens of industries.
Those swipes often include high-level interest payments, and are generating billions for banks, even as everyday Americans fall deeper into debt.
Americans have a record amount of debt sloshing around the US economy – and banks just reported better-than-expected profits on interest payments
That mix has slapped an $18.2 trillion price tag on consumer debt in the US, with the average household owing more than $80,000 on their homes, credit cards, vehicles, and student loans.
But banks are saying that Americans keep spending, despite the increased costs.
‘Consumers remained resilient, with healthy spending and asset quality, and commercial borrower utilization rates rose,’ the bank’s top boss, Brian Moynihan, said.
‘In addition, we saw good momentum in our markets businesses.’
The Federal Reserve, which has kept interest rates above 4 percent to fight inflation, is partly to thank for the banks’ earnings surge.
When the Fed holds rates high, it pushes up the cost of borrowing across the economy — allowing banks to charge more on loans than they pay when customers service their debts.
Experts tell DailyMail.com will likely keep the Central Banks lending rate higher because of yesterday’s inflation spike.
JPMorgan and Citi also reported earnings growth driven by the same trends: bigger returns from customer loan payments and a strong quarter for their trading desks.
Wall Street’s trading floors at these banks have maintained a hot streak, as volatile markets triggered by tariffs, geopolitical conflicts, and economic uncertainty caused a surge in institutional trading.
The banks — which collect fees for helping clients buy and sell stocks, bonds, currencies, and commodities — are seeing better-than-expected returns from their capital markets businesses.
Goldman Sachs’ profit jumped 22 percent in the second quarter, largely because of the market turbulence.