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 second 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 to the global and US economy are shifting, with the consequences unknown.
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 Q2, as businesses continued to invest and hire; the economy’s resilience is driven partly by AI-related capital investments; the risks to the US and global economy are shifting, and it’s anybody’s guess as to how the risks will eventually play out; consumers and small businesses in the USA continue to show resilience, with strong employment driving spending; management thinks it’s really hard to untangle AI-related and non-AI-related capital investments; consumer spending remains robust across income segments; consumer delinquencies are lower than expected; management does not see a K-shaped economy in the USA; management thinks the US economy is in a slightly higher than normal inflationary environment
The U.S. economy has demonstrated notable resiliency this year, with stronger business investment and hiring. This strength is being supported by several tailwinds, including AI-driven capital investment, fiscal stimulus and the benefits of more efficient regulation. However, several risks are shifting below the surface like tectonic plates, including geopolitical tensions and wars, sticky inflation, large global fiscal deficits and elevated asset prices. We cannot predict how these forces will ultimately play out. They may remain manageable, but they could also cause meaningful disruptions when they shift or collide…
…Consumers and small businesses continue to show resilience despite elevated gas prices and inflation with higher tax refunds and a solid labor market contributing to strong spend growth…
…We do see some decent kind of CapEx and associated loan growth across the franchise. And at least on the surface, some of that does not appear to be AI related. However, I was a little reluctant to draw that conclusion too strongly just because the AI theme has started to proliferate in so many different parts of the economy, right? It’s like the comments about data centers wind up creating a lot of demand for like plumbers and electricians, right? So you wind up seeing it in sort of slightly nonobvious places. And so any given bit of loan growth or CapEx that you see that doesn’t superficially look like it’s AI-related might still be…
…Spend is kind of fine robust and across income segments. It seems like a bit of a tailwind there from tax refunds. Delinquencies are a little lower than we expected. And again, that’s a better performance. You see pretty much across the board by kind of FICO score. There’s some of that economic heterogeneity data came out from the Fed recently, which also I think doesn’t give a lot of support to the K-shape narrative essentially…
…From our perspective, through all the various dimensions, there’s not like that much there in terms to support the K-shape narrative…
…We are in a slightly higher than normal inflationary environment.
2. Net charge-offs for the whole bank (effectively bad loans that JPMorgan can’t recover) was flat at US$2.4 billion compared to a year ago (charge-offs was $2.3 billion in 2026 Q1)
Credit costs were $2.5 billion, with net charge-offs of $2.4 billion and a net reserve build of $149 million.
3. JPMorgan’s investment banking fees were up 27% in 2026 Q2 from a year ago because of strong performance in equity underwriting and mergers & acquisitions (M&A); management still sees a robust pipeline for capital markets activities; management thinks there’s some pull-forward in investment banking fees; management thinks the capital markets environment is close to as good as it gets, but they do not know how long it will last
IB fees were up 30% year-on-year, reflecting double-digit growth across all products with particularly strong performance in equity underwriting. While this quarter’s performance was supported by both some large ECM deals and the acceleration of the closure of some M&A transactions, the pipeline remains quite robust. And the current activity levels seem to be encouraging more activity. As a result, while conversion will obviously be dependent on market conditions, we expect activity levels to remain healthy…
…To what extent would this quarter’s results like particularly elevated as a result of some of the large high-profile IPOs and other capital raisings in particular. And I think clearly, there was some pull forward. And clearly, the large deals contributed meaningfully to this quarter results…
…It’s getting close to as good as it gets. We just don’t know how long it’s going to last…
…I just think we’re in a very healthy active exuberant market with very high prices and very high volumes, and we benefit from that. We just don’t know how long it will continue. Could it get a lot better than this? It can get better. But how much better? I don’t know.
4. Management now expects credit card net charge-offs for 2026 to be 3.2% (previous expectation was 3.4%; was around 3.3% in 2025)
We now expect Card net charge-off rate to be approximately 3.2% and reflecting better-than-expected consumer credit performance.
5. Management sees the market as being extremely risk-on
The market is clearly extremely risk-on and we’re kind of takers of that. And we’re trying to strike the right balance between supporting all our clients and being appropriately cautious in an environment that has some complicated dynamics in it.
6. Management is seeing some credit deals for data center development that they think are questionable
For whatever reason, I think the data center underwriting space is one that resonates with me as a kind of bellwether for what people are doing. And we passed on some deals that — obviously, because when you look at the data center stuff, the key question is like what happens with power supply, what happens with tenants, what happens with — it’s a well-discussed thing. And we have a pretty precise framework to govern what we’re willing to do and what we’re not willing to do in that space across those types of risks. And we saw some deals come through where we were just like, “Yes, we’re not doing that.”
So it’s normal, I guess, it’s competitive, and people are eager to be involved. And in some cases, there’s ironically some element of like relationship lending that’s happening through the data center space, when it’s kind of a start-up entity that’s building the data center. So that’s part of the story a little bit, too. But I don’t think we’re screaming from the rooftops that underwriting is — underwriting standards have collapsed, but I think you see normal pressures, and we’re navigating those in the way that we do, which is we do flex in some moments for particularly important clients in situations where we feel like it’s the right thing to do. But in general, we try to be the one that holds the line and make sure that we’re guided by our own risk appetite and a kind of appropriately skeptical view of the environment.
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