JP Morgan Chase, the biggest US lender by assets, said it expects strong consumer spending and artificial intelligence investment to contribute to a resilient economy, despite inflation risks associated with the Iran war.
JP Morgan reported a profit of $5.94 a share for the quarter ending on March 31, compared to expectations of $5.45 a share, according to LSEG data.
Market revenue was up 20 per cent to $11.6 billion, while net revenue was $50.5 billion, up 10 per cent.
Chief executive Jamie Dimon said the US economy experienced a resilient first quarter due to strong consumer and business spending and AI investment, although underlying risks remain.
“At the same time, there is an increasingly complex set of risks – such as geopolitical tensions and wars, energy price volatility, trade uncertainty, large global fiscal deficits and elevated asset prices,” Mr Dimon said in a statement.
Wells Fargo, which reported earnings on Tuesday, also sees a resilient economy and strong consumer and business spending, "though the impact of higher oil prices will likely take some time to materialise", chief executive Charlie Scharf said in a statement.
The earnings were reported shortly after the International Monetary Fund released the World Economic Outlook, its landmark global economic wellness check. The IMF downgraded the US – the world's largest economy – by 0.1 percentage point for the year to 2.3 per cent this year, reflecting the Iran war's impact.
The IMF anticipates a broader global economic slowdown due to the war and possibly a global recession if the conflict and ensuing energy shocks extend into next year.
“We've seen discussions over the last few days, ceasefire, no ceasefire, blockade, other blockade,” IMF chief economist Pierre-Olivier Gourinchas said. “So we don't know and the shock could get much bigger.”
At the same time, it expects US inflation to rise from 2.8 per cent last year to 3.2 per cent this year, before falling to 2.3 per cent in 2027. The fund cautioned that central banks would have to make trade-offs between moving to fight against inflation and slower growth.
The Federal Reserve is among a number of central banks in advanced economies to have adopted a wait-and-see approach towards rate cuts as it monitors the effect of rising oil prices on inflation. Projections released by the Fed last month showed officials still expect to cut rates once this year, in line with their December forecast.
Officials also suggested there is a potential to raise interest rates if inflationary pressures re-emerge.
This comes amid a pressure campaign by US President Donald Trump's administration to lower interest rates. Mr Trump has continually badgered the Fed – and its leader, Jerome Powell – for not delivering rate cuts at his desired scale or speed.
US Treasury Secretary Scott Bessent said he could understand if Fed officials wanted to monitor the war's impact on the economy before moving to cut rates. However, he also said he was confident that rate cuts would be necessary as he predicts core inflation to decline, Reuters reported.
Kevin Warsh, Mr Trump's nominee to replace Mr Powell as Fed chief at the end of his term next month, is due to have his congressional confirmation hearing next week.
Mr Warsh's nomination for the post is stalled after Republican senator Thom Tillis, who is on a committee charged with vetting Fed candidates, vowed to block it until a Justice Department criminal investigation into Mr Powell is resolved.
Mr Powell said he would remain in the position pro tempore until his successor is confirmed. He can still serve his remaining two years as a Fed governor, although he has not indicated whether he will do so.
Mr Bessent said the administration wants Mr Warsh to be confirmed as soon as possible.
