The banks’ reporting season has begun in the US and the experts hope to obtain indications of the development of the economy. The Q2 profits at JPMorgan Chase, the largest US bank, fell 28% from a year earlier, but the institution’s experts are seeing few signs of a recession. While customers are still spending and businesses are still borrowing, investment-banking revenue fell sharply. The JPMorgan report suggests that more uncertainties than normal would drag down big corporate activity such as mergers and acquisitions.
However, the Q2 numbers do not really reflect the waves of layoffs in the US tech sector that have taken place in recent weeks. These will only be found in the Q3 reports of the companies and banks. While unemployment was low in the US until Q2, it is likely to rise significantly in Q3.
JPMorgan shares fell 3.5% after the report was released on Thursday, while the Dow Jones Industrial Average dropped 0.5%. “The current news is actually quite good,” Chief Executive Jamie Dimon. “When you make a list of potential issues going forward…it could be a soft landing or a hard landing. You do have a serious set of issues out there,” Dimon continued. The global impact of Russia’s war in Ukraine would be an “economic hurricane” that just hasn’t arrived yet.
JPMorgan’s performance is typically viewed as a barometer of the broader economy, given the bank’s insights into consumer and corporate financial health. However, the latest report didn’t clarify whether the economy is headed for a downturn, WSJ concludes.
