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Bank of America CEO Says About US Consumers and Businesses Cautious on Spending

Brian Moynihan, Chief Executive Officer of Bank of America, said that currently in the United States, consumers and businesses are following an approach in the framework of spending planning, the main priority of which is caution.

Bank of America CEO Says About US Consumers and Businesses Cautious on Spending

According to the head of the mentioned financial institution, the specified tendency in behavior is the result of the impact from the side of such circumstances of the current configuration of the US economic reality as inflation, which demonstrates very impressive strength, and interest rates at a high level.

Last Thursday, May 30, during a speech at a conference held in New York, Brian Moynihan said that Bank of America customers are currently reducing the number of purchases in all categories of goods and services. In this context, he clarified that the relevant tendency concerns both households and consumers who are representatives of small and medium-sized businesses. Consumer activity fell in all sectors, including categories such as hard goods and software. It is worth noting that caution is, in a certain sense, the standard reaction of the consumer community during periods of economic uncertainty and rising costs of goods and services against the background of the lack of an unambiguous understanding of whether any changes are possible in this dynamic.

At a conference in New York, Brian Moynihan said that spending related to card payments, checks, and ATM withdrawals has increased by about 3.5% since the beginning of the current year, reaching approximately $4 trillion. At the same time, he clarified that this dynamic is a sharp slowdown compared to the almost 10% growth rate of the mentioned indicator, which was recorded in May last year.

Brian Moynihan said that both of Bank of America’s customer bases, which are directly related to the development of the United States economy, indicate that they are following a cautious tactic of slowing consumer activity. In this case, customer bases meant ordinary consumers and businesses. Mr. Moynihan also noted that the mentioned slowdown began last summer. According to him, a similar situation was observed in the period from 2016 to 2018.

Almost a year after the Federal Reserve’s latest interest rate hike so far, consumers and businesses continue to a kind of struggle with inflation and high borrowing costs. The current economic circumstances are more severe than those to which US society is accustomed. The central bank of the United States began implementing a policy of aggressively raising interest rates in March 2022. The mentioned actions of the financial regulator are efforts aimed at taming inflation. Also, in this case, one of the main goals of the Fed is to prevent the implementation of a recession scenario in the space of the economic system of the United States.

There is a widespread opinion in the expert community that the US central bank is taking steps in the right direction. In this case, it means that the measures taken by the financial regulator correspond to the stated goals. The current version of the Fed’s monetary policy has contributed to the stock markets reaching new highs this year. At the same time, consumers continue to face an increase in the cost of goods and services. This tendency continues to be a sensitive factor affecting the business of US companies. Consumers are correcting their behavior by reducing spending as part of a kind of reaction to the unfavorable state of affairs in the United States economy.

Brian Moynihan says that food shoppers are visiting more and more store locations in search of the best deals. According to him, currently, the average consumer goes to three grocery stores instead of two. Bank of America has reviewed the relevant information.

Brian Moynihan also stated that the slight increase in overall expenses is propped up by travel and entertainment nowadays. At the same time, he said, other categories of expenses, except for insurance payments, are on a downward trajectory.

Brian Moynihan spoke about the importance of consumer support measures, which are an important part of the economic system of the United States. According to him, the consumer community is becoming more vulnerable due to what is happening in the surrounding space. He noted that this also applies to small and medium-sized businesses. According to him, business owners have recently been saying that they are happy with their overall situation, but they are hiring fewer employees and buying hardware and software less often.

Bank of America economists suggest that the Fed will be able to bring inflation under control by the end of next year. Brian Moynihan predicts that the central bank of the United States will begin cutting interest rates later in 2024. In his opinion, the US economy will show growth of about 2%, which will avoid the materialization of a recession scenario.

It is worth noting that about two weeks ago, Brian Moynihan, while speaking to the media, said that consumers in the United States remain in good shape as a result of rising wages. At that time, in the mentioned context, he noted that many things could deteriorate in the short term, but the current situation is favorable.

Bank of America is currently the second-largest financial institution in the United States by assets after JPMorgan Chase.

As we have reported earlier, Bank of America Launches Massive Update to Its Mobile App.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.