US consumer spending is robust despite economic uncertainty, according to Capital One's CEO Richard Fairbank. The bank observed a 5% increase in credit card purchase volume in the first quarter to $157.9 billion, driven partly by consumers purchasing ahead of anticipated trade tariffs. Fairbank noted stable consumer debt repayment with improving delinquency and payment rates. However, he cautioned that some customers are feeling financial stress as evidenced by an increase in those making minimum payments, indicating that while many are faring well, there are underlying concerns due to inflation and interest rates.
"The US consumer remains a source of strength in the economy. That's true for almost any metric that we look at," Richard Fairbank said.
Despite inflationary pressures and higher interest rates, overall consumer debt repayment remains stable near pre-pandemic levels, Fairbank said.
There are worrying signs - the portion of customers making just the minimum payment was just above pre-pandemic levels, reflecting that while the average customer is doing well, some customers at the margin are likely feeling stress from inflation and elevated interest rates."
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