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Despite — or maybe because of — volatile markets and increasing consumer costs, recent quarterly earnings reports from big banks show that the banks themselves are doing well (1). But JPMorgan Chase, at least, is still preparing for a possible recession.
During JPMorgan’s earnings call for the first quarter of 2026 (1Q26), Chairman and CEO Jamie Dimon declined to predict whether the U.S. was heading for a recession (2) — however, he did write that, whenever the next credit cycle hits, he thinks “it’ll be worse than people expect.”
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Here’s why JPMorgan is preparing for hard times, plus some other takeaways from the big banks’ 1Q26 earnings reports.
Volatile markets are good for big bank trading
Many of the big banks are reporting high profits this quarter. Citigroup’s net income, for example, is up 42% (3), while Morgan Stanley’s net income is up more than $1 billion in the past 12 months, from $4.3 billion in 1Q25 to $5.6 billion in 1Q26 (4).
One factor that can explain why profits are up is the same market volatility that’s causing gas and grocery prices to skyrocket — as banks can make money from market volatility through trading.
The combined trading revenue of JPMorgan, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley and Bank of America was around $45 billion for 1Q26, according to The Wall Street Journal (1). Comparatively, their combined trading revenue was just over $30 billion last quarter (4Q25), and under $40 billion in 1Q25.
But trading wasn’t the only area where banks saw revenue increases, as many saw double-digit growth from wealth management. Bank of America credited their 12% increased global wealth and investment management revenue to “higher asset management fees, up 15% to $4.2 billion, reflecting higher market valuations and strong assets under management flows (5).”
This essentially means the bank is managing more high-quality assets than it was before.
Read More: Robert Kiyosaki warned of a ‘Greater Depression’ — with millions of Americans going poor. Was he right?
JPMorgan is preparing for the next recession to be worse than average
One of the topics Dimon discussed is the credit cycle, which is the idea that credit goes through periodic expansions and contractions (6).
During expansion, more people are taking out loans or other forms of credit, and those loans are good quality — people are less likely to be delinquent with their payments. During contraction, however, fewer people are taking loans, and more people are falling behind.
Contractions in a credit cycle are often (but not always) tied to recessions. They’re also worse for the banks’ bottom lines. Dimon, however, didn’t explicitly say that he thinks a recession is coming in the quarterly earnings call.
“I’m not forecasting anything,” Dimon said (2). “I’m simply saying, for JP Morgan, we have to be prepared for a recession, and that you could have stagflation. Obviously, if you have stagflation and higher rates for longer and credit spreads gap out, that will put a lot of stress and strain on leveraged companies as they refinance.”
In a recent letter to shareholders (7), Dimon says he thinks the next credit cycle will be worse because credit standards have been weakening “across the board.” He also says that private credit isn’t very transparent, which means people will sell based on predictions rather than actual losses.
How you can prepare your wallet for a potential recession
More and more companies are conducting large layoffs (8), and a possible recession could make it even harder to find your next job if you’re impacted.
The common advice is to save three to six months of expenses in your emergency fund, but it might be a good idea to save even more if you’re worried about high unemployment rates. Some financial gurus even recommend up to a year so you can, hopefully, weather the economic fallout of a down cycle.
Earn interest on your emergency savings
Parking your emergency funds in a high-yield account can allow your cash to work harder for you behind the scenes.
A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.
A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks, and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.
That’s ten times the national deposit savings rate, according to the FDIC’s March report.
Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8M FDIC Insurance eligibility through program banks.
From here, you can ideally access your emergency funds in the event of an unexpected job loss, medical emergency or sudden shift in your financial situation.
Don’t try to predict the market
Dimon says it’s hard to predict which industry will be hit the hardest by a recession. This means that knowing whether a specific company or set of companies in your portfolio will tank — and leave a significant hole in your investments — can be rather difficult.
That’s why legendary investor Warren Buffett recommends a far simpler approach — investing in index funds.
“The trick is not to pick the right company. The trick is to essentially buy all the big companies through the S&P 500 and to do it consistently and to do it in a very, very low-cost way,” Buffett told CNBC in 2017 (9).
With recession odds rising as the conflict with Iran drags on, trying to time the market or make a lump-sum investment could feel like a gamble.
Investing smaller amounts on a regular basis, regardless of what headlines are saying, might be a better approach. Even small, consistent contributions — like spare change automatically invested from everyday purchases — can steadily grow over time through compounding.
For instance, investing $20 each week for 30 years can help you save over $179,000, assuming it compounds at 10% annually (10).
Planting the seed of an investment
If this approach appeals to you, tools like Acorns make it easy to stay consistent by investing your spare change in the background — no heavy lifting required.
Signing up for Acorns takes just minutes: All you have to do is link your cards, and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a diversified portfolio of ETFs managed by experts at leading investment firms like Vanguard and BlackRock.
With Acorns, you can invest in an index ETF with as little as $5 — and, if you sign up today, Acorns will add a $20 bonus to help you begin your investment journey. All you have to do is set up a small recurring deposit, which you can scale up when you want, if you want.
Diversify your portfolio
The best way to prepare for the unpredictable is through diversifying your investment portfolio. That way, your bottom line will stay relatively stable even if an industry you’re invested in takes a big hit.
One place investors often turn when markets get shaky is gold. The precious metal has long been seen as a safe haven — and that reputation solidified at least somewhat in 2025.
Despite some pullbacks, prices have still surged more than 40% in the past 12 months, as economic uncertainty pushes investors to look for stability (11).
Going for gold
If you’re looking to get in on the gold rush, you can actually combine the inflation-resistant properties of the precious metal with the tax advantages of an IRA by opening a gold IRA with the help of Priority Gold.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainty.
To learn more, you can get a free information guide that includes details on how to get up to $10,000 in free silver upon making a qualifying purchase. That way you can make sure that gold is a good fit for you, and your portfolio.
Spreading your risk with real estate
Another way to spread your risk is through real estate. Unlike stocks, property values and rental income don’t always move in lockstep with the broader market, which can help balance out volatility. Real estate — especially the prime variety — tends to continue to perform during periods of inflation. Everyone needs a place to live, after all.
And thanks to online platforms like Arrived, you can now invest a portion of your portfolio in real estate without having to worry about the added headaches of being a landlord.
Backed by world-class investors, including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties, earning a passive income stream without the extra work that comes with being a landlord of your own rental property.
To get started, simply browse through their selection of vetted properties, each picked for their potential appreciation and income generation. Once you choose a property, you can start investing with as little as $100, potentially earning monthly dividends.
One of the biggest perks of real estate platforms like Arrived is flexibility. Unlike selling a home — which can be time-consuming and stressful — you can typically exit your investment much more quickly. Investors with Arrived gain access to their newly launched secondary market, where they can buy and sell shares of individual rental and vacation rental properties directly on the platform every quarter.
The best part? For a limited time, when you open an account and add $1,000 or more, Arrived will credit your account with a 1% match.
— With files from Kit Pulliam
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
The Wall Street Journal (1), (8); JPMorgan Chase (2), (7); Citigroup (3); Morgan Stanley (4); Bank of America (5); Federal Deposit Insurance Corporation (6); CNBC (9); Acorns (10); APMEX (11)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
