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Illustration: Aïda Amer/Axios

A phenomenon ushered in by the pandemic is lingering: less borrowing. People are paying down their credit card balances faster, and mom-and-pop shops are holding back on loans. Thank all the stimulus for that.

Why it matters: Government aid left consumers and businesses buoyed with cash, so they aren't turning to banks to borrow nearly as much.

  • "Consumers have continued to use liquidity from stimulus and other relief programs to pay down debt, driving lower loans," Citibank CFO Mark Mason said during the bank's earnings call Wednesday.

What's new: Spending is soaring, but loan balances aren't, the big banks said this week.

  • Wells Fargo said Wednesday loan balances are down 10% compared to a year ago — and 6% from the first three months of 2021.
  • At JPMorgan, they're down 3% (but lending is picking up among its wealthiest clients, Bloomberg reports).

There are some signs of life. Bank of America said consumer banking loans and leases saw the first quarterly uptick in a year — though they're down 12% from 2020.

  • And there's strong demand among consumers that want loans for cars and homes, JPMorgan CEO Jamie Dimon said Tuesday.

Between the lines: The dynamic is squeezing a profit engine for banks (though they are still making plenty of money).

  • An upshot: All the cash sloshing around meant fewer loans going bad — something banks braced for at the onset of the pandemic.

What to watch: Executives bet borrowing momentum kicks in when stimulus wears off and the economy revs up.

  • "Companies need to build inventory and hire workers to meet the growing customer demand," which could spur more borrowing, Bank of America CEO Brian Moynihan said Wednesday.

Go deeper

Oct 13, 2021 - Podcasts

Philanthropy aids in poverty decline

In 2020, the U.S. poverty rate declined as a result of stimulus checks and unemployment aid. What also helped the decline? There was an increase in cash programs from charities. Could “cash-in-hand” be a long-term solution to end poverty?

Axios Re:Cap talks with Axios’ future correspondent Bryan Walsh on how philanthropic organizations are using cash assistance and what cash can’t fix.

Dan Primack, author of Pro Rata
5 hours ago - Politics & Policy

Democrats' billionaires tax explained

Illustration: Aïda Amer/Axios

There is now legislative language behind the push to tax American billionaires on unrealized capital gains, as Sen. Ron Wyden last night released his 107-page plan.

Why it matters: This would be a sea change in U.S. tax policy, which has only applied to realized gains (otherwise known as income).

COP26 head warns Glasgow summit will be "harder than Paris"

Alok Sharma, U.K. COP26 president, in Milan on Sept. 30, 2021. Photo: Stefano Guidi/Getty Images

U.K. COP26 President Alok Sharma told reporters Tuesday that the upcoming talks in Glasgow, widely viewed as the last chance to avoid some of the worst consequences of global warming, will be extremely difficult.

Driving the news: Sharma sought to temper expectations and note that the agenda features some of the toughest items that negotiators have punted on at previous summits.