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 fourth 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 long-term risks remain.
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 2025 Q4; the labour market, though soft, has not worsened; consumers continue to spend and businesses remain healthy; management thinks the good conditions could last; management thinks markets are underestimating risks; consumer sentiment is weak, but spending-trends are not deteriorating; debit and credit sales volume were up 7% in 2025; management thinks the short-term macro outlook is positive, but there are longer-term risks, including fiscal deficits in the US and other countries; management sees the Federal Reserve’s ongoing purchase of T-bills as a tailwind for the economy
The U.S. economy has remained resilient. While labor markets have softened, conditions do not appear to be worsening. Meanwhile, consumers continue to spend, and businesses generally remain healthy. These conditions could persist for some time, particularly with ongoing fiscal stimulus, the benefits of deregulation and the Fed’s recent monetary policy. However, as usual, we remain vigilant, and markets seem to underappreciate the potential hazards—including from complex geopolitical conditions, the risk of sticky inflation and elevated asset prices…
…Despite weak consumer sentiment, trends in our data are largely consistent with historical norms and we are not currently seeing deterioration. Across income groups, debit and credit sales volume continued to perform well, up 7% year-on-year…
…When you’re guessing what the macro environment is going to be, if you ask me, in the short run, call it, 6 months to 9 months and even a year, it’s pretty positive. Consumers have money. There’s still jobs, even though it’s weakened a little bit. There’s a huge — there is a lot of stimulus coming from the One Big Beautiful Bill. Deregulation is a plus in general, not just for banks but — banks will be able to redeploy capital. But the backdrop is also important, but the timetables are different. Geopolitical is an enormous amount of risk. I don’t have to go through each part of it. It’s just a big amount of risk that may or may not be — determine the state of the economy. The deficits in the United States and around the world are quite large. We don’t know when that’s going to bite. It will bite eventually because you can’t just keep on borrowing money endlessly…
…The Fed, they don’t call it QE but they’re talking about doing $40 billion a month of buying T-bills. That adds $40 billion a month into bank — all things being equal, to bank reserves. And most of that initially shows up in wholesale deposits and then maybe gets redeployed. So we’ll see how that plays out too. But it does create more liquidity in the system, which I should have mentioned is another tailwind for the economy.
2. Net charge-offs for the whole bank (effectively bad loans that JPMorgan can’t recover) rose 4% from US$2.4 billion a year ago
Credit costs of $4.7 billion with $2.5 billion of net charge-offs and a $2.1 billion net reserve build…
…Net reserve build of $2.1B, reflecting a $2.2B reserve established for the forward purchase commitment of the Apple credit card portfolio.
3. JPMorgan’s investment banking fees fell in 2025 Q4 from a year ago because of a tough comparison-period and some deals that were pushed into 2026; management sees a strong pipeline for capital markets activities
IB fees were down 5% year-on-year, reflecting a strong prior year compare and the timing of some deals that were pushed to 2026. In terms of the outlook, we expect strong client engagement and deal activity in 2026, supported by constructive market dynamics, which is reflected in our pipeline.
4. Management is mindful of risks in non-bank financial institution (NBFI) lending; management sees NBFI lending as having structural protections for lenders, and losses in the category will generally occur only in the event of fraud or a deep recession
In light of the growth and the novel elements of some components of this activity, we are quite mindful of the risks. But given the structural protections, you would generally expect losses in this NBFI category to appear either as a result of additional instances of fraud-like problems or as a result of a particularly deep recession that erodes all the credit enhancement. In that scenario, losses associated with traditional lending to end borrowers would likely be the greater concern for the industry.
5. Management’s current assumption is 2 interest rate cuts for 2026
As usual, the outlook follows the forward curve, which currently assumes 2 rate cuts.
6. Management expects credit card net charge-offs for 2026 to be 3.4% (was around 3.3% in 2025)
On credit, we expect the 2026 card net charge-off rate to be approximately 3.4% on favorable delinquency trends driven by the continued resilience of the consumer.
7. Management thinks that if caps on interest rates on credit cards are implemented, a lot of people will lose access to credit, especially those who need credit the most, and that will have a negative impact on the economy
For the purposes of this call, given how little we know at this point, the way I would prefer to talk about it is, just assume for the sake of argument that something in the general mode of price controls on credit card interest rates goes through, what would be the consequences of that.
And I think the first thing to say, which you obviously know very well, is that the card ecosystem is an exceptionally competitive ecosystem. It’s among the most competitive businesses that we operate in. And that’s true for all levels of borrower credit score, from high FICO to low FICO. And so in that context, when you — just basic economics, when you start with that as your starting point, the right assumption about what the response of the system is going to be to the imposition of price controls is not that you will simply compress the profit margins, which are already at their sort of competitively optimal level, and thereby pass on benefits to consumers. What’s actually simply going to happen is that the provision of the service will change dramatically.
Specifically, people will lose access to credit, like on a very, very extensive and broad basis, especially the people who need it the most, honestly. And so that’s a pretty severely negative consequence for consumers and frankly, probably also a negative consequence for the economy as a whole right now.
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