Banks are thermometers for the economy. Here are 3 things to watch when they report earnings.

• Wall Street heavyweight JPMorgan will kick off bank earnings season next week.

• What they say could offer a clearer read on whether borrowers are still holding up.

• Banks may also shed light on how much of the economy is being propped up by the AI boom.

There’s a lot of jargon in the average bank earnings call — net interest margin, capital markets, credit quality. But if you cut through the noise and know what to listen for, you can learn a lot about the state of the economy.

Next week, many of the nation’s biggest banks will report results for the three months that ended September 30. America’s biggest bank, JPMorgan Chase, kicks things off Tuesday, alongside Wells Fargo and Citi, followed by Bank of America on Wednesday.

Thanks to the government shutdown, which has halted a slew of economic data, these earnings calls could shed light on the health of both the American consumer and businesses. They may also offer insight into the AI boom and its role in the economy’s growth.

“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, he said, is: “Are we starting to see any real cracks in the armor?”

Here are three key indicators to watch:

Credit quality is a way of assessing whether customers are making good on their loans or missing payments because money is tight.

Stovall said Wall Street “is really divided” about what credit quality might look like this earnings season, with some predicting deterioration and others forecasting continued strength.

“People are going to be listening closely to earnings and asking, ‘Is your customer base really holding up?’ he said, adding that he expects “a little bit of slippage,” but not much change from the previous quarter.

Last quarter, banks told Wall Street analysts that their data suggested the economy was chugging along despite concerns about tariffs slowing business and increasing costs for consumers.

“We continue to struggle to see signs of weakness,” JPMorgan’s CFO Jeremy Barnum said. “The consumer basically seems to be fine,” he added.

Bank loan growth indicates whether consumers and businesses have sufficient confidence in their future earnings potential to borrow money to purchase homes, expand their companies, or start new businesses.

“Are borrowers’ risk appetites going up? Are they borrowing more?” Stovall explained, adding that Federal Reserve data that tracks commercial bank balances suggests some softening in new loan demand in the third quarter.

“I think that’s going to be a little bit softer. And we have some data that supports that,” he added.

Softness may also be due to increased competition from non-bank lenders. Issuing loans outside the traditional banking system has become a driving growth model for companies like Apollo Global Management, which once primarily specialized in corporate buyouts.

Further complicating matters, the industry’s loan growth has been increasingly linked to the money banks lend to nonbanks, which in turn use that money to lend to companies, acquire businesses, or finance residential and commercial mortgages.

“When you look at loan growth for across the bank space, 60% of it year over year has come with loans to non-depository financial institutions, which includes private equity, private credit firms,” Stovall said.

The AI arms race has become one of the economy’s biggest boosters — and banks are, in many ways, at the center of it.

Major lenders, including JPMorgan Chase, Goldman Sachs, and Morgan Stanley, have helped provide billions in loans and other financing to AI firms such as CoreWeave and to companies building the infrastructure behind artificial intelligence.

What investors will want to watch for is how much of the industry’s business will eventually be tied to a sector with great potential but whose business model has yet to be proven. Additionally, what are the risks associated with the ballooning demand for AI investments, including through bonds?

“The good times are when the future bad loans are made,” said Mike Mayo, a veteran bank analyst at Wells Fargo.

Banks could also shed light on corporate spending tied to the technology. Mayo said he believes Wall Street has little choice but to invest aggressively in AI to stay competitive — even if some of that spending won’t pay off.

“A lot of projects are not going to bear fruit, he said, adding, “That’s the cost of admission to the AI world.”

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