Although economic problems are everywhere, before the rain falls.

Why it matters: The market has been pricing in the risk of an economic slowdown as inflation continues to rise.

  • But business is good and Consumer spending – the backbone of the US economy – remains strong because workers have more money and “jobs are plentiful,” according to JPMorgan CEO Jamie Dimon.

Running a story: Americans will spend 10% more than they did last year and about 30% more than in 2019, Dimon said this morning on a call with analysts while reviewing the results of the second quarter. (They have fallen short of Wall Street’s expectations.)

  • In the same call, CFO Jeremy Barnum said that the nation’s largest bank “has not yet focused on reinvesting in discretionary spending, including low-income segments.”

On the number: Spending on travel and dining jumped 34% over last year, Barnum said, as consumers shifted their interests from goods to services this year.

  • The combination of loans and repayments has increased by 15%, he added.

Yes, but: Rising prices are eroding take-home pay, leading to greater reliance on credit cards, which could limit future growth.

  • Real hourly earnings fell 1% from May to June, and 3.6% from June last year to this year, according to government data released this week.

What they say: “The most important economic signal in the next few weeks will happen [be] Earnings are released as companies report them,” Gargi Chaudhuri, head of BlackRock’s iShares Investment Strategy Americas, wrote earlier this week.

  • Specifically, Chaudhuri and his team will be keeping a close eye on which companies can continue to sell premium prices to consumers, and which sectors are driving lower forecasts.

Main picture: “Even when we get into trouble, [consumers are] going into the economy with less energy, in better shape than they did in ’08 and ’09, and in better shape than they did in 2020,” Dimon said.



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