What Bank Executives Are Saying About the US Economy in Earnings Calls

The earnings season kicked off Friday as JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) released quarterly results, with executives cautioning that while the economy has remained resilient, persistently high inflation and elevated interest rates could have negative impacts.

JPMorgan shares suffered the most in Friday’s session, falling 6.5%, while Citi shares lost 1.7% and Wells Fargo shares finished 0.4% lower.

“While we remain confident in our ability to produce strong returns and manage risk across a range of scenarios, the economic, geopolitical, and regulatory uncertainties that we have been talking about for some time remain prominent, and we are focused on being prepared to navigate those challenges as well as any others that may come our way,” JPMorgan Chief Financial Officer (CFO) Jeremy Barnum said during the company’s earnings call.

JPMorgan CEO Jamie Dimon said on the call that JPMorgan Chase’s customers are “in pretty good shape,” but cautioned that a number of factors including high interest rates and inflation could change the economic outlook for the bank’s consumer and business customers.

Dimon was the least optimistic of the executives who spoke Friday, echoing statements he made in his annual shareholder letter earlier this week that JPMorgan is prepared for a wide range of economic situations, including higher interest rates or a recession, and that he feels less confident than most that the U.S. economy will execute a “soft landing,” avoiding a recession.

Wells Fargo CFO Mike Santomassimo said in the company’s earnings call some investors are looking to the 2024 presidential election as a factor in how aggressively they want to invest, but interest rates and the impact they could have in the long term are the dominant factor.

“I think at this point, what we’re seeing most is related to the overall sort of macroeconomic environment we’re in with such high rates, and people having some uncertainty just generally around where things go from here,” Santomassimo said.

Citigroup CEO Jane Fraser said the global economic environment so far this year has been a story of “economic resiliency supported by tight labor markets and the consumer.” Fraser was notably more optimistic than others, and said conditions in a number of international markets and the U.S. are disinflationary, suggesting a soft landing could be increasingly likely.

Citi’s CFO Mark Mason, however, said that while Citi thinks a soft landing is still likely, other risks to the economy could persist if interest rates remain elevated for too long.