Jamie Dimon says U.S. consumers are in ‘good shape.’ Evidence says he’s wrong.

Dimon added, “even if we go [into] a recession, they’re going with rather good conditions, low borrowings and good house-price values still. But the headwinds are substantial and somewhat unprecedented.”

Over at Wells Fargo
WFC,
+1.45%,
CEO Charlie Scharf said, “The U.S. economy continues to perform better than many had expected. Although there will likely be continued economic slowing and uncertainty remains, it is quite possible the range of scenarios will narrow over the next few quarters.”

“I’d say we’re seeing a more cautious consumer but not necessarily a recessionary one,” Citi
C,
+1.06%
CEO Jane Fraser said in a Friday earnings call.

There are reasons to think many Americans would disagree with these upbeat — albeit guarded — assessments on their financial wellbeing.

Consumer debt is rising while the food and rent costs that were pushed higher by inflation in the past two years likely aren’t getting punctured. Many Americans still haven’t tucked away money for emergency savings. And don’t forget, student loan payments are returning in October to stretch the budgets of more than 40 million borrowers.

Both things are true, said Ida Rademacher, vice president at the Aspen Institute and co-executive director of the Aspen Financial Security Program.

“The economy is doing surprisingly well and many people in the economy are doing surprisingly well — and at the same time, many people in the economy are continuing to make trade-offs in their everyday lives to manage to stay afloat,” she said.

Over one-third, 35%, of people told Federal Reserve researchers they were worse off in 2022 compared to a year earlier, Rademacher noted. That’s the largest share since Fed researchers started asking the question nearly a decade ago.

The disconnect happens when trying to identify one single trend about Americans’ money when their financial lives can be so different now, Rademacher said.

“The idea that there’s an average consumer is a myth,” she said. In fact, “the ‘average’ is one the greatest last-standing American myths at the moment,” she later added.

There’s only so much that corporate earnings can show, she said. The ways that people measure economic health and performance of the economy are now very different from the ways that we measure the economic health and performance of a household, she added.

Here’s the measures that many people are watching when they decide if they are in a good position — or not.

Credit-card debt

Credit-card balances stuck at $968 billion during the first quarter, according to the Federal Reserve Bank of New York. The first quarter is usually when Americans pay off the credit-card debt that accumulates in the back end of the year, capped by holiday spending. But the collective balances didn’t decline from quarter to quarter for the first time in over two decades, researchers said.

While aggregate balances aren’t declining, the APRs for the balances are increasing due to rising interest rates. The average rate on a new credit-card offer was 24.06% in June, up from 23.98% in May, according to LendingTree.

Inflation

Inflation rates are coming off their four-decade high. New data this week showed inflation rates dropping to 3% in June year over year. But one problem could be nudging those inflation rates even lower, economists say.

It’s unlikely prices will decrease for many grocery store items, food industry experts said. Rents will “almost definitely” not revert to pre-pandemic levels, one economist at Zillow
Z,
+0.37%
said.

Savings

“Consumers are slowly using up their cash buffers,” Dimon said in a statement with the second quarter earnings results.

For many people, the buffers haven’t been big enough to build emergency savings. Just under half (48%) of people polled on their emergency savings said they had enough to cover three months of costs, according to a Bankrate survey last month. That’s flat from a year earlier. Meanwhile, 57% said they were uncomfortable with the amount of money they did have for a rainy day.

Student loans

Federal student-loan payments are going to come back in October, and without large-scale loan forgiveness. The Supreme Court said the Biden administration overstepped its power with the cancellation order.

The administration argued that there would be a rise in defaults and delinquencies without cancellation, and it’s applying a one-year grace period to shield borrowers from collections and credit score dings.

It’s been more than three years since people had to pay their federal student loans.

Sides can argue on the merits of loan forgiveness, but there’s “little doubt” cancellation could have boosted the ability of many borrowers to build their wealth, said Adam Kamins, a regional economist for Moody’s Analytics. “These are uncertain times for those who borrowed from the government to fund their post-secondary education,” he said in a Friday note.

See: Is now a good time to refinance your student loans? You could save money, but tread carefully.

‘Normalization not deterioration’

To be clear, bankers aren’t playing Pollyanna. Bracing for foreseen and unforeseen financial risks is a core part of the banking business. The pending risks and unknowns include the continuing effects of Russia’s invasion of Ukraine and the consequences of tighter monetary policy, Dimon said Friday.

So when bankers voice a vote of confidence for the consumer, that’s no small thing. And they also remember consumers’ financial conditions before the pandemic.

For example, JPMorgan saw a double-digit percentage gain in outstanding credit-card balances. But the activity was “normalization, not deterioration,” Jeremy Barnum, JPMorgan’s chief financial officer said on the Friday earnings call.

There’s also the bullish view beyond bank balance sheets.

The jobless rate fell to 3.6% in June and the economy added 209,000 new jobs, the Bureau of Labor Statistics said last week. While just a little under the consensus forecast for 240,000 new jobs, many economists cheered the report.

The numbers could be interpreted as a sign the economy was cooling down without crashing and didn’t need too many more Federal Reserve interest rate increases, they said.

“Labor market performance is great, but it doesn’t completely transfer into how people’s  financial security is,” said Rademacher.

There are also some indicators that people are still spending. During the two-day Amazon
AMZN,
+1.90%
Prime Day e-shopping bonanza, people spent a record $12.7 billion, according to Adobe
ADBE,
-0.95%.
But more people purchased the wide array of goods with ‘buy-now-pay-later’ methods compared to a year ago.

There’s money, and then there’s mood.

The same day of the mega bank earnings, a recurring gauge on consumer sentiment exceeded economist expectations and reached the highest level since September 2021.

The improving outlook is aided by a strong job market and gas that’s cheaper than a year ago. But consumer confidence is “restrained,” one analyst said.

Besides, the preliminary July read of 72.6 is still well below the cheery mode Americans were in just before the pandemic. In February 2020, the same index was at 101.

“Part of the disconnect is who we know and are in community with,” Rademacher said. People with good jobs and benefits may not know too many people struggling with debt or money worries, she noted.

“The squeeze that’s happening on the American cash flow is pretty hard to navigate for many, many households.”