What bank earnings just revealed about the health of the American consumer

Earnings season has arrived once again, and last week, several major banks reported their second-quarter results.

Banks like JPMorgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC) serve millions of American households and hold trillions in consumer deposits. These banks can help investors understand how Americans are spending their money, as well as the challenges some may face with debt and delinquency.

Here's what these bank earnings just revealed about the health of the American consumer right now.

Consumers across the credit spectrum are holding up well

There has been a lot of discussion about the K-shaped economy, which refers to a divergence in which high-income households are benefiting from rising wealth and spending, while lower-income groups face stagnant wages and inflation. The upper part of the K represents asset-rich consumers who profit from stock market gains, while the lower part represents those struggling with price increases amid persistent inflation, fueling fears of an economic slowdown.

In their earnings calls, bank executives have pushed back against the K-shaped recovery story, saying that consumers across the credit spectrum are holding up well. JPMorgan Chief Financial Officer Jeremy Barnum told investors during the company's Q2 earnings call that consumer spending is "robust and across income segments" and that its better-than-expected credit performance is visible "pretty much across the board by any kind of FICO score."

If lower-income consumers were buckling, it would typically show up in late payments and depleted savings. However, Bank of America also reported that consumers remain resilient, with "average deposit investment balances and spending all showed linked quarter increases," according to CFO Alastair Borthwick.

Delinquencies are down while spending is up

The data backs up what bankers are saying. In Q2, JPMorgan's net charge-off rate came in at 3.34%, down from 3.47% in Q1 and a 6-basis-point improvement from last year's Q2. This positive development has enabled the bank to lower its full-year net charge-off rate forecast to 3.2%. At Bank of America, the credit card charge-off rate was 3.55% for the quarter, down from 3.82% a year ago and 3.64% in the previous quarter.

Credit metrics are holding up well, as is spending. At JPMorgan, combined debit and credit card sales volumes increased by 10% year over year. At Bank of America, these volumes rose 9%.

Bank executives attribute the strong performance to a couple of factors. Bank of America pointed to a stable labor market, with the unemployment rate hovering around 4.2% and new jobless claims remaining low. JPMorgan echoed the sentiment about a strong labor market and noted a positive tailwind from higher tax refunds in the quarter.

Resilient consumers should help support further economic growth

Bankers said that consumers are performing well across the income and credit spectrum, though they admit some cohorts may still be struggling. During the Morgan Stanley U.S. Financials Conference in June, Marianne Lake, Chief Executive Officer of JPMorgan's consumer and community banking division, noted that a small group is seeing wages fail to keep pace with inflation.

Bank of America notes that wealthy clients are doing exceptionally well, as its global wealth and investment management division saw client balances jump 12% year over year to an all-time high of $4.9 trillion, leading to record revenue of $6.9 billion, a 16% increase year over year.

Banks continue to keep a close eye on inflation and on pockets of consumers experiencing falling real wages. That said, the American consumer remains strong and resilient. As unemployment remains relatively low and credit metrics improve, banks remain confident in extending credit, which should help support consumer spending and drive continued economic growth as we head into the second half of 2026.

Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Courtney Carlsen has positions in JPMorgan Chase and Morgan Stanley. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.