With second-quarter results declared, bank earnings solidify a strong US economy | Invezz
Invezz is an independent platform with the goal of helping users achieve financial freedom. In order to fund our work, we partner with advertisers who compensate us for users that Invezz refers to their services. While our reviews and assessments of each product on the site are independent and unbiased, brands may pay to appear higher up our table rankings or place ads in specific areas of the site. The order in which products and services appear on Invezz does not represent an endorsement from us, and please be aware that there may be other platforms available to you than the products and services that appear on our website. Read more about how we make money >
Jul 15, 2021
- The market analysis says that banks could be in for a strong earnings season.
- Second-quarter results of big banks beat expectations. Thanks to better than expected loan losses.
- No doubt, the U.S. economy is growing strong. However, experts question for how long?
The U.S. economy appears to be in a comfortable position, at least based on the performance of big banks during the second quarter. Quarterly earnings from JPMorgan Chase & Co. (NYSE: JPM), Goldman Sachs (NYSE: GS), and the likes are proof of a strong economy, according to The Wall Street Journal. In fact, experts echo the sentiments that the big banks’ earnings have acted as catalysts fuelling the overall growth of the U.S. economy.
Consumers are spending money
Consumers are spending money like they once did during pre-pandemic times. From booking leisure trips to swiping their credit cards for meals at restaurants, Americans are indeed spending money. Thanks to the cash from government stimulus programs, card debt has been cleared off faster than the spending rate increased. Wells Fargo CFO Mike Santomassimo highlighted this trend and was quoted by WSJ that consumers are even starting to “act in a way” that resembles the pre-pandemic realities.
The housing market sector is performing well
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
Home prices have recorded an appreciation. Second homes and suburban mansions have many takers in the market. Wells Fargo & Co. and JPMorgan extended more mortgages than in the first quarter, which was already a good stretch for home lending. JPMorgan Chief Financial Officer Jeremy Barnum said:
“We’ve seen so much home price appreciation that maybe affordability starts to be a little bit of a headwind”
The million-dollar question remains unanswered
The markets are performing better than they did before the Covid pandemic. So, while on one hand, experts are happy about the fact, on the other hand, concerns are raised, that for how long can we expect this situation to last?
“We believe that this summer represents the acid test for whether normalized trading levels will be higher than pre-pandemic,” Goldman analysts wrote before the banks reported earnings.
While this question has yet to be answered, Citigroup CEO Jane Fraser may have hinted at what we can expect. Fraser said there is a “general sense of optimism” and the bank has a “fabulous pipeline” of deals. Nevertheless, we may still be at the stage where it is too early to declare a sustainable economic outlook ahead. The CEO said:
One never wants to jinx these things
67% of retail CFD accounts lose money
Finance & Banking
Stocks & Shares