JPMorgan Chase, $JPM, has said the US Economy has likely made a soft landing.
“These results align with a soft landing,” said Chief Financial Officer Jeremy Barnum during a conference call. “It fits with what we might call a Goldilocks economic situation.”
While the Fed's recent interest rate cut will take time to impact the banking system, many analysts expect banks' profits from lending to shrink as they lower interest rates on loans.
However, JPMorgan exceeded expectations on Friday, and fellow major bank Wells Fargo also reported stronger-than-expected earnings. JPMorgan’s shares rose nearly 5%, while Wells Fargo’s climbed more than 6%, boosting financial stocks and helping drive broader market gains.
These results add to economic data suggesting that the Federal Reserve is nearing a soft landing. Inflation is gradually moving closer to the Fed’s target, job creation remains robust, and unemployment continues to be low.
But not all indicators are positive. JPMorgan saw a decline in deposit balances and expects higher loan losses from its credit card division, signaling that some consumers are feeling more financial strain.
JPMorgan's profit fell by 2% to $12.9 billion, though this was better than anticipated due to strong lending profits. The decline was mostly due to increased losses from credit card loans. Revenue rose 7% to $42.6 billion.
At Chase Bank, customers continued spending on credit cards, and balances are growing. Although the bank expects more credit card loan losses, executives are not overly concerned.
“The consumer is doing fine and remains on solid footing,” Barnum added.
