Last weekend, I was coaching my kids’ youth baseball team in a tournament. They didn’t play perfect baseball, far from it. There were a few errors and missed opportunities, but they kept showing up each inning, putting the ball in play, getting walked, stealing bases, and finding a way to stay in the game. They were resilient. Not dominant. Not flawless. But steady enough to keep moving forward. That idea stuck with me this past week as I watched bank earnings roll in.
When the country’s largest banks report earnings, it’s about more than profits. It’s a window into the financial health of consumers, businesses, and the broader economy. Based on this past week’s reports, the message is fairly clear: the economy is holding up, but it’s starting to feel some pressure.
On the surface, things look solid. Goldman Sachs reported a record quarter in banking and trading. The bank’s profit rose 19% in the first quarter, driven by a resurgence in deal activitiy and market volatility. PNC Bank’s total first quarter revenue rose 13% to 6.17 billion as client activity remained robust.
Major banks like JPMorgan, Wells Fargo, and Citigroup have described the consumer as “resilient,” noting that spending remains steady despite higher interest rates and persistent inflation. People are still traveling, dining out, and making purchases; key drivers of economic growth. The three banks earned a collective 27.5 billion dollars in the first quarter, up 17% from a year ago.
But beneath that strength, there are subtle shifts worth paying attention to. More consumers are relying on credit to maintain their spending. Credit card balances and auto loans continue to rise, while the excess savings many households built up in recent years are gradually declining. That doesn’t signal immediate trouble, but it does suggest that financial flexibility is tightening.
Banks themselves appear to be preparing for that possibility. One important indicator is loan loss provisions; funds that banks set aside to cover loans that may not be repaid. Several large banks increased these reserves this quarter, a sign they expect some level of credit stress ahead. Historically, this is often an early warning signal, even if current conditions still appear stable.
The business side of the economy is showing a similar pattern. Activity remains steady, with trading and investment banking providing a boost to earnings, but the tone from executives has shifted. Words like “uncertain” and “cautious” are being used more frequently, reflecting a more measured approach to hiring, borrowing, and expansion. Companies are still moving forward, but not as aggressively.
Interest rates continue to play a central role in this dynamic. Higher rates have supported bank profitability by increasing returns on loans. At the same time, they are making it more expensive for consumers to carry debt and for businesses to invest.
Taken together, the data points to an economy that is still growing, but at a slower and more fragile pace. This is often what a late-stage economic cycle looks like; growth continues but the margin for error narrows. It’s not perfect. Even though there are mistakes, pressure points, and signs of fatigue, the economy continues to move forward.
The question for investors isn’t whether challanges exist today. It’s whether your plan is built to hold up if the game gets tougher from here. Like my youth baseball team, the U.S. economy remains resilient, not because everything is going just right, but because it’s finding ways to keep going even when conditions aren’t ideal.
Have a blessed week!
Joe Shearrer
Opinions voiced above are for general information only & not intended as specific advice or recommendations for any person. All performance cited is historical & is no guarantee of future results. All indices are unmanaged and may not be invested directly.
All investing involves risk, including loss of principal. No strategy assures success or protects against loss.
The economic forecast outlined in this material may not develop as predicted & there can be no guarantee that strategies promoted will be successful.
Fervent Wealth Management is a financial management and services entity in Springfield, Missouri.