Banks have kicked off earnings season on Wall Street, releasing a bunch of quarterly profit-and-loss reports Friday morning before the start of trading. 

A quick rundown:

• JPMorgan Chase: Profit was up 6%.
• Bank of America: Profit was up 2%.
• Wells Fargo: Profit fell by half, as it took a $3.7 billion charge for a settlement with the Consumer Financial Protection Bureau.
• Citigroup: Profit was down by 21%, but it still beat expectations, as did most of the big banks.

Now, those earnings are kind of all over the map. But taken together, they can tell us something about how the economy’s doing and how much risk there is of it doing worse — maybe tottering into recession later this year. 

Earlier this week, Karen Petrou at Federal Financial Analytics called banks “canaries in the economic coal mine.”

In the face of high inflation, rising interest rates and a slowing economy, the canary’s still singing.

“So far, the banking industry overall has done pretty well,” said banking consultant Bert Ely.

Those big banks are increasing how much cash they put aside to cover losses on loans, he said. “The big uncertainty hanging over banking is what’s going to happen in the economy. If we have a serious recession, then some of them may be struggling.”

Right now, consumers are still in pretty good shape. But savings are dwindling and credit card balances are rising, per Greg McBride at Bankrate.

“You’re seeing credit card rates that have already moved to a record high and are still likely to increase further,” he said.

Banks are getting ready for worse times to come, according to equity analyst Eric Compton at Morningstar.

“Delinquencies, charge-offs, loan losses are still relatively low. However, they’re finally starting to go up again,” Compton said. “We aren’t seeing any sort of recessionary levels. But the strain is finally starting to increase a little bit.”

One area of increasing weakness, in the midst of a stock market downturn and rising interest rates, is investment banking. That’s according to Infrastructure Capital Advisors’ Jay Hatfield, a former investment banker himself.

“Investment banking is a very cyclical business. Having been one, I can attest to that. When the market’s way down, investment bankers stop doing new equity issuance.”

And that’s led to a slump in fees and a wave of layoffs as the new year begins.

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