The major US banks JPMorgan Chase, Citigroup, Wells Fargo, and BNY Mellon warned in their second-quarter results on Friday that low-income customers are showing signs of financial stress – just a few months before the presidential election.

In the second quarter results, banks reported on consumers struggling with lower savings and higher prices. During the Covid-19 pandemic, government stimulus programs helped Americans brace against inflation. However, as households have spent the money, the financial health of consumers could play a crucial role in the outcome of the presidential election in November.

Consumer confidence remains "stubbornly subdued" and fell to an eight-month low of 66 according to the latest University of Michigan survey.

The profits of Citigroup's US consumer credit business, which includes credit cards, fell by 74 percent compared to the previous year. The bank's Chief Financial Officer, Mark Mason, explained that overall consumer spending has declined and account balances are now lower than before Covid.

We are not seeing the same growth in consumer spending as in previous quarters," said Mason. "There was less traffic in the retail stores we partner with.

JPMorgan CFO Jeremy Barnum said that the general assessment of the bank is that consumers are doing well, but he pointed out weaknesses among less wealthy customers.

In the low-income segment, we see some evidence that spending is shifting from discretionary to non-discretionary expenses," he said, adding that this "is traditionally understood as a sign of weakness.

BNY-CEO Robin Vince warned that "inflation is very painful for many people," especially for those without savings.

You can see the first signs that a portion of the population, who do not have assets to invest in the stock market, have exhausted the reserves they built up during the pandemic and are now facing the fact that the general price level is simply higher," Vince said.

The concerns of bankers regarding low-income Americans mirrored a warning from PepsiCo on Thursday that North American sales volumes would be impacted by the effects of several years of inflation on low-income consumers.

JPMorgan, Citi, and Wells Fargo – three of the four largest US banks by assets – as well as BNY Mellon reported lower revenues from lending, as this business stagnates following enormous gains from the Federal Reserve's interest rate hikes.

Wells Fargo stated that the credit demand from private and business customers is "restrained" and lowered its forecast for loan revenue for the rest of the year.

When you look beneath the surface and really examine what is happening with different consumers, you see that lower-income people are struggling," said Wells Fargo Chief Financial Officer Mike Santomassimo.

The brightest light in the industry was investment banking, which boosted hopes for a sustainable recovery in business activity, as Wall Street weathered the quarter significantly better than Main Street.

JPMorgan stated that investment banking fees increased by 50 percent to $2.4 billion, even better than the bank's own projections for investors last month. At Citigroup, investment banking fees rose by 60 percent year-over-year to $853 million in the quarter.

Overall, JPMorgan's profits in the second quarter reached a record high of just over 18 billion dollars, a 25 percent increase compared to the previous year.

Citigroup announced that quarterly profits increased by 10 percent to $3.2 billion compared to the previous year, driven by the investment banking business and cost reductions. The bank, which is undergoing its largest restructuring in years, cut 8,000 jobs in the quarter.

Wells Fargo, which has a smaller investment bank than its competitors, reported a profit decline of 0.6 percent to $4.9 billion, while BNY Mellon, which is less exposed to low-income consumers due to its specializations in asset management and custody, exceeded analysts' expectations for revenue and net profit.

The stocks of JPMorgan, Citigroup, and Wells Fargo fell in early trading in New York on Friday, while BNY Mellon gained more than 3 percent.