Wells Fargo CEO sees ‘more downside’ to U.S. economy as lower-income consumers struggle

Wells Fargo CEO Charles Scharf said Wednesday that while corporations and higher-income consumers are thriving, lower income Americans are struggling to stay afloat.

The bank’s data shows that “companies are in really great shape” and spending among all income levels has been steady, but there are signs of stress among lower earners, Scharf said in an interview on CNBC’s Squawk Box.

“There is this big dichotomy between higher-income and lower-income consumers which continues and is a real issue,” Scharf said.

“The low end is spending the money that they have, so their balances are below … pre-pandemic levels; they are living on the edge,” he said.

Scharf was responding to questions about the U.S. economy the day after JPMorgan Chase CEO Jamie Dimon said that a Labor Department report showed the economy is weakening. Hiring has slowed to a near halt in recent months, and the department’s latest revision on Tuesday lowered job creation by 911,000 positions for the year through March.

“When you look at just the overall data in terms of jobs, it’s undeniable,” Scharf said.

“So yeah, things actually feel very good today, certainly relative to what you think they could be,” he said. “But it’s not equal across wealth spectrums, and there’s probably more downside than upside.”

Executives and investors are grappling with mixed signals about the U.S. economy in the first year of President Donald Trump’s second tenure. Stock indexes are near all-time high levels amid persistent concerns over price inflation and mounting worries over job creation.

In his dealings with middle market companies across the U.S., Scharf said that many CEOs support Trump’s efforts to address the country’s trade imbalances with his tariff policies. Even so, the tariffs are a likely driver of low job creation, he said.

“They’re willing to deal with the uncertainty, but they need to react to that,” Scharf said. “So part of that is just being very prudent in how they’re hiring….That certainly seems to be dampening the increase in jobs.”