JPMorgan Chase (NYSE: JPM) is currently the largest bank in the USA by total assets. Because of this status, JPMorgan is naturally able to feel the pulse of the country’s economy. The bank’s latest earnings conference call – for the third quarter of 2025 – 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 uncertainty has heightened.
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 generally resilient in 2025 Q3 but job growth softened and uncertainty heightened; consumers and small businesses remain resilient and credit delinquencies were stable and better than management expected; a deterioration in the labour market is a risk management is watching
While there have been some signs of a softening, particularly in job growth, the U.S. economy generally remained resilient. However, there continues to be a heightened degree of uncertainty stemming from complex geopolitical conditions, tariffs and trade uncertainty, elevated asset prices and the risk of sticky inflation…
…Consumers and small businesses remain resilient based on our data. While we are closely watching the potentially softening labor market, our credit metrics, including early-stage delinquencies remain stable and slightly better than expected…
…Now talking to our economists, I was struck by something that Mike Farley said about thinking about the current labor market in this moment of what people are describing as a low hiring, low firing moment. You can think of that as potentially explained by employers experiencing high uncertainty. and so if you believe that and you think about This moment as a moment of high uncertainty, I think tipping point is a little bit too strong a word. But certainly, as you look ahead, there are risks. We already have slowing growth. There are a variety of challenges and sources of volatility and uncertainty. And so it’s pretty easy to imagine a world where the labor market deteriorates from here.
2. Net charge-offs for the whole bank (effectively bad loans that JPMorgan can’t recover) rose from US$2.1 billion a year ago; the increase is partly related to the case of fraud involving Tricolor
Credit costs were $3.4 billion with net charge-offs of $2.6 billion and a net reserve build of $810 million. In Wholesale, charge-offs were slightly elevated as a result of a couple of instances of apparent fraud in certain secured lending facilities. Otherwise, in both Wholesale and Consumer, credit performance remains in line with our expectations…
…Given the amount of public attention the Tricolor thing has gotten in particular, I think it’s worth just saying that, that’s contributing $170 million of charge-offs in the quarter, which we call out on the wholesale side.
3. JPMorgan’s investment banking fees had good growth in 2025 Q3, with strength in equity underwriting; management sees a robust pipeline for capital markets activities among companies and the outlook continues to be upbeat; management is seeing revived animal spirits among companies for credit
IB fees were up 16% year-on-year, reflecting a pickup in activity across products with particular strength in equity underwriting as the IPO market was active. Our pipeline remains robust and the outlook, along with the market backdrop and client sentiment continues to be upbeat…
…[Question] My question is both of demand and credit fundamentals, what are you seeing in terms of drivers of client demand there on the lending side on the Wholesale front?
[Answer] From the perspective of our franchise, this kind of moment of revived animal spirits, let’s say, is driving demand. We’re seeing very healthy deal flow. We’re seeing acquisition finance come back.
4. Management now expects credit card net charge-offs for 2025 to be 3.3% (was previously expected to be 3.6%)
On credit, we now expect the 2025 card net charge-off rate to be approximately 3.3% on favorable delinquency trends driven by the continued resilience of the consumer.
5. The savings rate of consumers is currently a little lower than what management expected back in May 2025 because the consumer’s spending is robust even though income is lower
[Question] I wanted to ask about the retail deposit assumptions that were embedded in that. At Investor Day, you discussed an expectation for deposits to grow 3% year-over-year by the fourth quarter and I think accelerating to 6% next year. It looks like they were flat this quarter. So I just wanted to see if you’re still expecting those kind of previously expected growth rates of 3% and 6%.
[Answer] You’re referring specifically to a page that was presented at Investor Day [in May 2025] by Marianne for the CCB with some illustrative scenarios for what we might expect CCB deposit growth to do as a function of some different potential macroeconomic scenarios… So as we sit here right now and we sort of update the macro environment, a few things are true. One is the personal savings rate is a little bit lower than expected. Consumer spending remained robust, while income was a bit lower. So that’s all else equal, decreasing balances per account in CCB.
6. Management thinks subprime auto loans have been very challenging lately for organisations that are lending there
Subprime auto has been a challenging space for people in that industry.
7. The AI theme is overwhelming the US’s financial markets; management thinks the return on investment from AI spending needs to show up in terms of slowing down growth in the bank’s expenses, but it’s hard to measure, and management is seeing some productivity tailwinds
I think the risk is because of how incredibly overwhelming the AI theme is for the whole marketplace right now and all the various effects that it’s having in terms of equity market performance, MAG 7, data center build-out, electricity costs, like it’s an overwhelming thing…
…We’re spending a lot of money on it. We have very deep experts. As Jamie always says, we’ve been doing it for a long time, well before the current generative AI boom. But in the end, the proof is going to be in the pudding in terms of actually slowing the growth of expenses. And so what we’re doing is kind of rather than saying you must prove that you’re generating this much savings from AI, which turns out to be a very hard thing to do, hard to prove and might, at the margin result in people scrambling around to use AI in ways that are actually not efficient and that distract you from doing underlying process reengineering that you need to do. What we’re saying instead is let’s just do old-fashioned expense discipline and constrain people’s growth, constrain people’s headcount growth…
…Even if we can’t always measure it that precisely, there are definitely productivity tailwinds from AI.
8. Management thinks nonbank financial institutions in the USA has higher credit risks than banks
I would just add that it’s a very large category of nonbank financial institutions and probably a number like half of it, we would consider very traditional, not like different. There is a component, which is different today than it was years ago, and there’s a component which isn’t that different. But if you look at like COs, CLOs and lending to leveraged entities that are underwritten with leveraged loans, so there’s kind of a little bit of double leverage in there.
I would say that, yes, there will be additional risk in that category that we will see when we have a downturn. I expect to be a little bit worse than other people expect it to be because we don’t know all the underwriting standards that all of these people did. Jeremy said these are very smart players. They know what they’re doing. They’ve been around a long time but they’re not all very smart. And we don’t even know the standards that other banks underwriting to some of these entities. And I would suspect that some of those standards may not be as good as you think. Hopefully, we are very good, though we make our mistakes, too, obviously.
So yes, I think you’d be a little bit worse. We’ve had a benign credit environment for so long that I think you may see credit in other places deteriorate a little bit more than people think when, in fact, there’s a downturn. And hopefully, it will be a fairly normal credit cycle. What always happens is something is worse than a normal credit cycle than a normal downturn. So we’ll see.
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