JEREMY HOBSON: We got a first look at the health of the financial sector this morning with a quarterly earnings report from JPMorgan Chase. The bank says profits were up 13 percent last quarter but not because of strength on the consumer side.
Marketplace’s New York Bureau Chief Heidi Moore is with us live with the details. Good morning.
HEIDI MOORE: Good morning Jeremy.
HOBSON: Well Heidi, where’s the profit coming from for JPMorgan?
MOORE: Well basically JPMorgan has decided to put less money aside in case they lose money on loans. So that’s about $1 billion that is reflecting a profit for them, but is not actually a real profit.
HOBSON: And how important are the earnings that we’ll get from other banks, as well as JPMorgan, the financial sector, when it comes to the rest of the economy?
MOORE: It’s crucial actually because JPMorgan is a big lender — in fact the number one lender — to small businesses. And we’ve seen what happens with big businesses. They’re doing OK. The consumer is struggling. But we have this middle branch of small businesses that really need a boost. So when JPMorgan does well, it increases the chances that they’ll lend to them.
Here’s Quincy Krosby. She’s a strategist with Prudential Financial.
QUINCY KROSBY: Let’s remember that small business owners are responsible for about 40 percent of all new job creation. They have been a missing part — a crucial part of the economic mosaic of this recovery.
So, JPMorgan plans to lend about $12 billion more to small businesses this year. If that works, this should be a good sign for the rest of the economy going forward.
HOBSON: Marketplace New York bureau chief Heidi Moore. Thanks so much.
MOORE: Thank you Jeremy.