JPMorgan Chase is expected to deliver strong profits Thursday, a day after Goldman Sachs' better-than-expected earnings, providing much-needed good news for U.S. banks.
NPR's Adam Davidson tells Robert Siegel that this week's news means that the largest U.S. banks are more than just surviving.
"They're not just making it from one quarter to the next," he says. "They're actually growing, expanding, hiring new people, not firing people, moving into new business lines, making real money off their own power.
"That does seem like a big change."
He warns, however, that it is still too soon to be "dancing in the streets." Davidson notes that the success of JP Morgan and Goldman Sachs is, at least in large part, the result of the economic crisis. Many of their competitors are either out of business or hurt, and the banks have access to money from the federal government, meant to shore up the nation's financial system. Davidson says that much of the banks' health is a result of government policy.
"The good news is that at least some corners of our banking system seem to be beginning the process of moving beyond the crisis and being healthy, but the banking system as a whole is still awfully sick, still not able to live on its own without government support," he says.
Davidson notes that the big test is not whether the stars of the banking system are doing well, but how weaker financial institutions, such as Bank of America and Citibank, perform. More important than that, he says, are jobs and the gross domestic product.
"We need employment to go up not down," Davidson says. "That's probably not going to happen for a little while.
"We need our economy as a whole, the GDP, to expand. That's probably going to be a little while before we see that."