Bank of America Chairman and CEO Brian Moynihan says consumers are spending “at a faster rate” but that he is still concerned about rising inflation and supply-chain issues affecting the economy this winter.
Moynihan told the Associated Press he sees robust consumer spending driving economic growth in the coming year, but said the recent decline in consumer sentiment due to increasingly higher prices and lack of certain goods are adding to Americans’ frustration this holiday season.
Americans are facing price increases in essential categories such as food, energy, and housing.
“(The consumer) is earning more money, but now they are worried that these costs are going to go up faster than their wages,” says Moynihan. “Also, frankly, the constant ebb and flow of this virus weighs on people’s minds over time.”
“The U.S. consumer is spending money a lot of money, spending at a faster rate than I have ever seen, and I’ve been tracking this data for 15 years.”
He says that he continues to feel confident in the U.S. economy as consumer spending remains strong.
Despite rising prices, Moynihan says that spending on the Bank of America’s debit and credit cards has surged as the economy is gradually recovering from the COVID-19 recession.
For the month of November, spending was up 27 percent compared to November 2019, due to a profitable Thanksgiving weekend.
BoA faced a two-year extended crisis due to the pandemic, as the bank had to set aside billions of dollars to cover troubled mortgages and credit card accounts, as millions of Americans suddenly could no longer pay their bills.
The increase in consumer spending is mainly in entertainment, travel, and restaurants, according to Moynihan.
He says that consumers do not seem to be deterred by supply chain shortages and transportation bottlenecks, which have caused retail businesses to raise prices.
Moynihan continues to say that while gasoline prices are dramatically higher than a year ago, gas purchases make up only 5 percent of the total spending on the bank’s credit and debit cards.
He also claims that the trillions of dollars in government loans and stimulus checks along with the rollout of the vaccine, have softened the blow of the pandemic on the economy.
“We flooded the zone with all this fiscal stimulus and accommodative monetary policy and we were able to bring this huge economy back out of recession relatively quickly,” said Moynihan.
He also credits the Federal Reserve for cutting interest rates to near-zero levels and restarting its bond-buying program to keep up economic demand during the pandemic.
According to the report, unemployment claims hit its lowest numbers since the beginning of the pandemic in March 2020, with rising wages, and GDP growth expecting to top 5 percent in the fourth quarter.
