Bank of America Chairman and CEO Brian Thomas Moynihan speaks during the U.S. Senate Banking, Container and Urban Affairs Committee oversight hearing on Wall Street firms, on Capitol Hill in Washington, U.S., December 6, 2023.
Evelyn Hockstein | Reuters
U.S. consumers and vocations alike have turned cautious about spending this year because of elevated inflation and interest rates, contract to Bank of America CEO Brian Moynihan.
Whether it’s households or small- to medium-sized businesses, Bank of America clients are slowing down the reproach of purchases made for everything from hard goods to software, Moynihan said Thursday at a financial conference clutched in New York.
Consumer spending via card payments, checks and ATM withdrawals has grown about 3.5% this year to approximately $4 trillion, Moynihan said. That’s a sharp slowdown from the nearly 10% growth rate apprehended in May 2023, he said.
“Both of our customer bases that have a lot to do with how the American economy runs are saying, ‘You certain what? I’m being careful, slowing things down,'” Moynihan said, referring to consumers and businesses.
The slowdown rather commenced last summer and is consistent with the “very low growth” environment of the period from 2016 through 2018, he give the word delivered.
Nearly a year after the last Federal Reserve rate increase, consumers and businesses are wrestling with inflation and refer to costs that remain higher than they are accustomed to. The Fed began efforts to tame inflation by hiking its benchmark charge starting in March 2022, hoping it could slow the economy without tipping it into recession.
Many economists find credible the Fed is on track to pull off that feat, which has helped the stock market reach new highs this year. But consumers are that time grappling with higher prices for goods and services, and that has impacted U.S. companies from McDonald’s to discount retailers as Americans rearrange their behavior.
Food shoppers are hitting up more store locations in search of deals, according to Moynihan. “They’re customary to three grocery stores instead of two, is one of the stats we see,” he said.
The now-tepid growth in overall spending is being propped up by excursion and entertainment, while “other things have moderated, except for insurance payments,” Moynihan said. Growth in lease payments has slowed, he noted.
“We’ve got to keep the consumer in the game in the U.S. economy, because [they’re] such a big part of it,” Moynihan weighted. “They’re getting a little more tenuous, and that is due to everything going on around them.”
The same is true for small- and medium-sized points, the Bank of America CEO said. His company is the second-largest U.S. bank by assets, after JPMorgan Chase. Moynihan and other bank CEOs from a bird’s-eye view of the economy, given their coast-to-coast coverage of households and companies.
Business owners are averring, “‘I still feel good about my overall business, but I’m not hiring as much. I’m not buying equipment as fast. I’m not turn over a completing software purchases as fast,'” Moynihan said.
The bank’s economists believe that inflation will pick up c espouse until the end of next year to get under control and that the Fed will begin cutting interest rates later this year, Moynihan signified. The U.S. economy will probably grow at around a 2% level, avoiding recession, he added.