JPMorgan Chase (NYSE: JPM) is currently the largest bank in the USA by total assets. Because of this status, it is naturally able to feel the pulse of the country’s economy. The bank’s latest earnings conference call – for the first quarter of 2026 – was held earlier this week and contained useful insights on the state of American consumers and businesses. The bottom-line is this: the US economy remains resilient, but the risks are growing in complexity.
What’s shown between the two horizontal lines below are quotes from JPMorgan’s management team that I picked up from the call.
1. The US economy remained resilient in 2026 Q1; consumers and businesses continue to spend; there are multiple tailwinds supporting the economy’s resilience, but the risks to the economy are growing in complexity; consumer spending growth in 2026 Q1 is faster compared to a year ago; energy is just 3% of the typical consumer’s expenditure, so they are not significantly affected by higher energy prices; the strength of the American consumer is the result of a strong labour market, so if the labour market were to weaken for any reason, the American consumer will also weaken
The U.S. economy remained resilient in the quarter, with consumers still earning and spending and businesses still healthy. Several tailwinds are supporting this resiliency, including increased fiscal stimulus, the benefits of deregulation, AI-driven capital investment and the Fed’s asset purchases. At the same time, there is an increasingly complex set of risks— such as geopolitical tensions and wars, energy price volatility, trade uncertainty, large global fiscal deficits and elevated asset prices. While we cannot predict how these risks and uncertainties will ultimately play out, they are significant and they reinforce why we prepare the Firm for a wide range of environments…
…Notwithstanding the recent volatility in market and gas prices based on our data, consumers and small businesses remain resilient with consumer spend growth continuing above last year’s pace…
…[Question] How resilient is consumer spend and credit if energy prices remain high? And are there any signs of cracks that you’re seeing at all?
[Answer] There really is not anything new or interesting to say this quarter. We’ve looked at it through every angle. Early roll rates, delinquency rates, cash buffer, spend, discretionary spend, non-discretionary spend, it all looks consistent with prior trends and fundamentally, healthy. So let me add maybe just a little bit of nuance in the context of energy prices and what’s going on this quarter. So I think gas or energy cost is something like 3% of the typical consumer’s expenditure, at least in our portfolio. So it’s not nothing, but it’s not overwhelming. We’ve looked to see if there’s kind of evidence in there of people trading, decreasing other discretionary spending to adjust for higher gas prices, but it’s just kind of not enough yet to be visible.
I would caution, though, I think it remains fundamentally the case that the biggest single reason that the consumer credit performance is healthy is that the labor market is strong. And if you get bad outcomes in the Middle East, much higher energy prices or other problems that sort of do eventually track what has been, I think, from many people’s perspective, a surprisingly resilient American economy and a very resilient U.S. consumer, and that winds up having knock-on effects on the labor market, then you will see that come through, clearly. But right now, in the end, the story remains the same, which is resilient consumer that’s doing fine despite higher gas prices.
2. Net charge-offs for the whole bank (effectively bad loans that JPMorgan can’t recover) was flat at US$2.3 billion compared to a year ago
Credit costs of $2.5 billion with net charge-offs of $2.3 billion and a net reserve build of $191 million.
3. Management thinks there has been no recent changes in real-world systemic risk
It’s important to understand that under the current rule, the surcharges for almost all of the G-SIB banks are scheduled to increase meaningfully over the next 2 years, simply as a result of recent growth in the system despite, in our view, no change in real-world systemic risk.
4. Mortgage loan originations had strong growth in 2026 Q1, driven by refinancing of mortgages
In Home Lending, originations of $13.7 billion increased 46% year-on-year predominantly driven by refi performance.
5. JPMorgan’s investment banking fees were up 28% in 2026 Q1 from a year ago because of strong performance in mergers & acquisitions (M&A) and equity underwriting; management sees a strong pipeline for capital markets activities, barring significant deterioration in the ongoing Middle Eastern conflict; the sentiment of companies for capital markets activities has been surprisingly resilient
IB fees were up 28% year-on-year, driven by strong performance across M&A and equity underwriting, partially offset by lower debt underwriting. Looking ahead, client engagement and pipelines remain healthy, but of course, developments in the Middle East could have an impact on deal execution and timing…
…On the question of overall sentiment on the pipeline, I would describe it as resilient, maybe surprisingly resilient, given everything that’s going on. But I also think the time lines in the Middle East are kind of quite short. There are deadlines or negotiations. I think it’s reasonable for people to kind of proceed with their plans in the hope or maybe expectation that we get relatively quick resolutions. But if things start getting derailed, I would be surprised if you don’t see some impact on sentiment and on deal decision-making. But for right now, it seems quite resilient.
6. Management continues to expect credit card net charge-offs for 2026 to be 3.4% (was around 3.3% in 2025); management expects JPMorgan’s credit card loans to grow 6% in 2026
The adjusted expense outlook continues to be about $105 billion and the Card net charge-off rate continues to be approximately 3.4%…
…What we said about Card loan growth expectations at Company Update, which is that we said we expected 6% or maybe a little bit more, and that hasn’t really changed. That’s still kind of our core expectation.
7. Management thinks that there will not be systemic issues for banks even if the private credit industry experiences a default cycle because the private credit industry is still relatively small compared to the overall loans market banks are participating in; the credit quality within private credit portfolios has not gotten much worse
[Question] do you think that if we do have a default cycle in private credit, that it will be systemic?
[Answer] Private credit leverage lending is like $1.7 trillion, high-yield bonds are something like $1.7 trillion, bank syndicated leveraged loans are like $1.7 trillion, investment-grade debt is $13 trillion, mortgage debt is like $13 trillion, and there’s a lot of other stuff out there. And I pointed out that I think there’s been some weakening in underwriting and not just by private credit elsewhere. And there will be a credit cycle one day. And I think when there’s a credit cycle, losses will be worse than people expect relative to the scenario. I don’t think it’s systemic. It almost can’t be systemic at that size relative to anything else. But when recessions happen and values go down and people refi at higher rates, there will be stress and strain in the system. Are people prepared for that? I can’t speak for other banks, but these are — most of these things are on top of — you have to have very large losses in private credit before at least it looks like banks are going to get hit or something like that. So it doesn’t mean you won’t feel some stress and strain, and that you might have to do something about it, but I’m not particularly worried about it…
…We always had what we call marking rights to look at the underlying collateral, and that’s just a right that protects you and gives you certain rights, things like that. Obviously, if you ever see credit getting worse, and it’s gotten not terribly worse, the actual credit which a lot of these private equity — private credit guys are pointing out, the actual credit hasn’t gotten that much worse. There are pockets where it has. And credit spreads themselves haven’t gotten much worse in general, but there are pockets where it has. So we’ll be watching it closely. We think we’re okay on all of that.
8. Management thinks corporate and consumer debt are not too high, whereas government debt is high
Corporations in general, the debt is not too high. Consumers, in general, the debt is not too high. Most of the excess debt is in government debt at this point.
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