In the absence of clear government data, the nation’s biggest banks are about to become the next best source for understanding how the U.S. economy is really performing. When lenders like JPMorgan Chase, Wells Fargo, Citi, and Bank of America report their quarterly results this week, investors and analysts will be listening closely not just for profits and losses, but for signs of where the economy stands after months of uncertainty.
“You can think about banks as being thermometers of the economy,” said Nathan Stovall, head of financial institutions research at S&P Global Market Intelligence. “The question people will be asking is, are we starting to see any real cracks in the armor?”
The results, covering the quarter that ended September 30, come at a critical moment. With the government shutdown halting the release of key economic data, these reports could offer valuable insight into how both consumers and businesses are holding up under the weight of higher interest rates, geopolitical tensions, and shifting global trade patterns.
Here are the three key indicators experts say will tell the story behind the numbers.
The first and perhaps most telling signal is credit quality. It measures whether borrowers are paying back loans on time or beginning to fall behind, a direct reflection of household and business financial health. Wall Street remains split over what to expect this quarter, with some analysts predicting a modest deterioration and others expecting stability.
“People are going to be listening closely to earnings and asking, ‘Is your customer base really holding up?’” Stovall said. He anticipates “a little bit of slippage,” but not enough to signal widespread weakness.
So far, bank executives remain optimistic. “We continue to struggle to see signs of weakness,” JPMorgan CFO Jeremy Barnum said last quarter. “The consumer basically seems to be fine.” If that sentiment holds, it will reinforce the idea that Americans’ spending and debt repayment habits remain resilient even as inflation and borrowing costs stay elevated.
The second factor to watch is loan growth, a metric that reveals how confident consumers and businesses feel about their future. Strong loan demand usually suggests optimism people borrow when they believe they can repay while weaker demand can indicate growing caution.
Stovall said recent Federal Reserve data shows softening loan demand during the third quarter. “I think that’s going to be a little bit softer,” he noted. That decline might not signal panic but could suggest that higher interest rates are making borrowing less attractive. At the same time, banks are facing growing competition from nonbank lenders such as Apollo Global Management, which specialize in private credit and direct loans.
Nonbank financing has grown so much that a large portion of banks’ loan growth now comes from lending to those very institutions. “When you look at loan growth across the banking space, 60% of it year over year has come from loans to non-depository financial institutions, which includes private equity and private credit firms,” Stovall said. That trend underscores a fundamental shift in how capital moves through the modern financial system and how much traditional banks now depend on alternative lenders to keep their pipelines active.
The third trend investors are eyeing closely is the AI arms race and how much exposure banks have to it. The artificial intelligence boom has become one of the most powerful forces driving corporate investment, and banks are playing a pivotal role by financing the companies building its infrastructure.
Major lenders such as JPMorgan Chase, Goldman Sachs, and Morgan Stanley have provided billions in loans and credit lines to AI startups like CoreWeave and to data center developers supporting firms like OpenAI and Nvidia. These deals have fueled excitement but also raised concerns about concentration risk in a sector whose long-term profitability is still uncertain.
“What investors will want to watch for is how much of the industry’s business is being tied to AI a sector with huge potential but unproven economics,” Stovall said. Veteran bank analyst Mike Mayo of Wells Fargo put it more bluntly: “The good times are when the future bad loans are made.”
Mayo believes Wall Street has little choice but to continue investing in AI-related ventures to remain competitive, even if not every bet will pay off. “A lot of projects are not going to bear fruit,” he said. “That’s the cost of admission to the AI world.”
Altogether, these three indicators credit quality, loan growth, and AI exposure will give investors a real-time snapshot of how healthy the U.S. financial system is heading into the final stretch of the year. Strong credit performance and stable loan demand could affirm that the economy remains resilient despite high rates and political noise. But signs of rising defaults or weaker lending could point to the first hints of cooling after an unexpectedly strong recovery.
As Stovall put it, banks don’t just report earnings they report the temperature of the entire economy. And this week, everyone on Wall Street will be watching to see whether it’s running hot, cooling off, or beginning to show signs of a fever.
