Wall Street executives warn the U.S. economy is weakening despite strong earnings

The biggest names on Wall Street are finally saying what most people already feel: “Things aren’t looking good.” Even as traders bet on interest rate cuts and banks report high earnings, top executives are starting to admit they aren’t sure how long the good times will last.

Behind all the market hype, the doubts are loud, and they’re coming from the top floors.

On Tuesday, the Bureau of Labor Statistics revealed that the U.S. added nearly 1 million fewer jobs than they had reported over the past year, covering March 2024 to March 2025. That bombshell came just days after the payroll data for August showed only 22,000 new jobs, a number that barely moves the needle.

“The economy is weakening, whether it’s on the way to a recession or just weakening, I don’t know,” said JPMorgan Chase CEO Jamie Dimon in a midday interview on CNBC. He stood outside the bank’s brand-new Park Avenue HQ in New York when he said it. “The revision was big,” he added bluntly.

Meanwhile, just a few blocks away, JPMorgan’s co-head of commercial and investment banking, Doug Petno, painted a more cheerful picture. At a Barclays financial conference, he said:

“We feel there’s a lot of animal spirits at the moment. You would not have robust markets that we’re having if people were sort of running for cover.”

Petno claimed that Wall Street divisions, investment banking and trading, would both climb this quarter. He expects trading revenue alone to grow in the “high teens” compared to Q3 2024, putting them on track to break records by 2025.

Executives project strong earnings despite weakening economy

Petno wasn’t alone. Other Wall Street executives used the same Barclays stage to deliver upbeat third-quarter guidance. Bank of America CFO Alastair Borthwick said Monday, “We’re not finished yet with September, but I would think we’re gonna have a good investment banking quarter.”

The reason for all this optimism? The banks are making serious money from fees. That includes trading, dealmaking, and brokerage services, all juiced by high asset prices and companies issuing debt, merging, or even going public.

Shares of the top banks have surged. JPMorgan, Citigroup, Wells Fargo, Bank of America, and Goldman Sachs are all up between 15% and 38% this year. Their performance is beating the indexes.

According to Bank of America equity analyst Ebrahim Poonawala, this is being driven by expectations that the Fed will begin cutting rates this month. He called it a “catch-up trade” among regional banks in a note sent out Tuesday.

But the cracks are starting to show. Wells Fargo CEO Charles Scharf said Wednesday that while companies and high-income consumers are still doing well, low-income Americans are struggling.

On CNBC’s Squawk Box, he said, “Companies are in really great shape,” but warned that “there is this big dichotomy between higher-income and lower-income consumers which continues and is a real issue.” According to him, people on the low end are “living on the edge,” with balances falling below pre-COVID levels.

According to CME Fedwatch, traders expect the Fed to cut rates by a quarter percentage point at next week’s meeting, with more cuts to follow later this year. But not everyone’s convinced that this will help. At the same Barclays conference, Goldman Sachs CEO David Solomon said, “It just doesn’t feel to me like the policy rate is extraordinarily restrictive at the moment.” He added that “risk appetite is definitely out on what I’d say is the more exuberant end of the spectrum.”

PNC’s forecast shows the Fed cutting rates by a full percentage point between September and January, but CEO Bill Demchak isn’t sold. His concern is that as the Fed shrinks its balance sheet, long-term Treasury bonds, the 10- and 30-year, will keep selling off. “That is exacerbated by the impression that there’s political pressure on the Fed to cut rates,” Demchak told Yahoo Finance. He ended with a warning: “Fed independence is sacrosanct.”

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