Consumers are trying to front-run tariffs, companies are in “wait-and-see” mode, and market volatility shows no sign of waning.
These are just some of the trends to emerge from JPMorgan Chase’s first-quarter earnings call on Friday as analysts and investors clamored for insights into how Trump’s tariff policies might be impacting the broader economy. The bank reported better-than-expected results for the three months ending March 31, but all eyes were on what bank execs might have gleaned about the economy since Trump’s tariff policies went into effect on April 2.
CEO Jamie Dimon and CFO Jeremy Barnum described an economy that is still intact but bracing for trouble ahead. Consumers are still spending, but some of that is “front-loading spending” to get ahead of tariffs, Barnum said. Companies have paused spending and investing until they see how tariffs shake out, while lenders are building cash reserves to protect against rising delinquencies. The one bright spot is the bank trading desks, which are busier than ever as investors try to navigate whip-saws in stocks, bonds, and interest rates, the execs said.
JPMorgan’s chief economist, Michael Feroli, is predicting a 50/50 chance of recession, Dimon said. Whether that happens, he added, will depend on a range of factors including tariffs, but also how the nation deals with the US deficit, regulations, and the changing geopolitical landscape.
Dimon, who has reprised his role as the industry’s elder statesman amid the tariff chaos, pushed the Trump administration to reach a quick resolution on trade deals to stabilize the global economy.
“I think some of those issues, you are going to see them resolve — for better or for worse — in the next four months,” Dimon said. “So maybe when we’re doing this call next quarter, we won’t have to be guessing. We actually know what the effect of some of these things was,” he said.
Consumer spending patterns
Chief financial officer Jeremy Barnum broke down some changes to consumer spending patterns based on the company’s credit card data, but was cautious about drawing conclusions, saying it’s too early to know.
“Another thing that we are seeing, looking at the April data, would appear to be a little bit of front-loading of spending, specifically in items that might have prices go up as a function of tariffs,” Barnum said.
The company saw some weakening in spending among lower-income consumers but “no evidence of distress.” In fact, he said, some of the increases in April spending were driven by lower-income consumers.
Barnum also said the bank has seen a dip in spending on travel but was reluctant to draw conclusions about whether this suggests a tightening of the purse strings.
“It’s not obvious to us that that’s necessarily an indicator for broader patterns,” Barnum said. “There are a variety of potential explanations for the narrow drop in airline spend.”
Loans and liquidity
The bank boosted the amount it sets aside for credit losses by $973 million to $3.3 billion, citing a worse macroeconomic outlook.
Barnum said JPMorgan is not yet seeing a deterioration of lending quality, and loans are still being paid at the expected rate. Still, the bank is building reserves of $441 million for consumer lending and $549 million for wholesale lending to protect against people and companies not paying their loans.
Barnum said the firm has not seen “meaningful, observable draws” from clients, suggesting that client are not withdrawing their funds or using up their lines of credit to deal with losses. Some of the firm’s large institutional clients have discussed shoring up liquidity, he said, adding that the firm has not seen clients taking out more loans to meet those liquidity needs. Loans tied to market activity have increased, however.
Trading and banking
Both JPMorgan and its crosstown rival Morgan Stanley posted strong first-quarter revenues tied to their role executing trades for large investors, a trend that’s only expected to have accelerated since Trump’s tariffs sent markets spinning on April 2.
“I think this just happened to be very favorable conditions that we’ve managed very successfully,” said Barnum.
Barnum said that market conditions are causing them to adopt “a cautious stance” on the investment banking outlook and are seeing a “wait-and-see” attitude from corporate clients.
“I think we would characterize what we’re hearing from our corporate clients as a little bit of a wait-and-see attitude,” Barnum said. “I do think you see obvious differences across sectors. Some sectors are going to be much more exposed than others and have more complicated problems to solve.”
What’s at stake
Dimon called upon the Trump administration to finish negotiating trade deals and get it done sooner rather than later.
“I think the best thing to do is to allow the Secretary of Treasury and the folks working with him and the administration to finish as quick as possible the agreements that they need to make around tariffs and with our trading partners,” he said. “That does not mean you won’t have some of the effects take place anyway.”
When asked how the current economic and political situation compares to the past, Dimon said it remains to be seen. While tariffs and the economy are important, the priority should be on maintaining our geopolitical alliances.
“This is different. This is the global economy,” he said in response to an analyst’s question. “The most important thing to me is the Western world stays together economically, when we get through all this, and militarily, to keep the world safe and free for democracy. That is the most important thing.”
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