Slowdown in Consumer and Business Spending Mirroring 2016, Says BofA CEO Brian Moynihan

Bank of America's CEO, Brian Moynihan, reports that current spending patterns of consumers and businesses are reminiscent of 2016, a period of very low growth, despite the persistent inflation pressures. Moynihan shared these insights at the AllianceBernstein Strategic Decisions conference, highlighting the cautious yet ongoing growth in the economy.

Blake Hartford
By Blake Hartford 119 Views Add a Comment

Bank of America’s CEO, Brian Moynihan, shared insights this week on consumer and business spending patterns that echo those of 2016, a period marked by very low growth.

Speaking at the AllianceBernstein Strategic Decisions conference in New York, Moynihan highlighted that while inflation pressures remain, spending habits are evolving in response. Consumers are enjoying experiences but cutting back on routine purchases.

The way people are spending money is consistent with what you read about which is it’s on experiences—it’s still driven at the margin by travel, entertainment, and things like that.

Brian Moynihan, Chief Executive Officer of Bank of America

Moynihan noted that money flowing through consumer accounts, encompassing transactions such as cell payments and debit cards, is growing at about 3.5% for the year to date. This rate is significantly lower compared to last year’s high single-digit or even double-digit growth.

In his speech, Moynihan drew parallels to mid-2010s spending behaviors, where low growth and low inflation characterized the economy. However, the current economic landscape is different, with inflation at 3.4% in April, surpassing the Federal Reserve’s 2% target.

The spending slowdown is evident across both consumer and commercial sectors. Consumers are now focusing more on experiences like travel and entertainment rather than everyday purchases, as exemplified by the economic impact of Taylor Swift’s Eras Tour, which generated substantial consumer spending.

On the business front, companies are cautious but still operational. They are moderating their expenditures on hiring, equipment, and software, reflecting concerns over various economic uncertainties and higher borrowing costs.

You know what, I’m being careful, slowing things down, still growing, still feel good about my overall business…but I’m not hiring as much, I’m not buying equipment as fast, I’m not making a commitment to software purchases as fast.

Brian Moynihan, Chief Executive Officer of Bank of America

Despite these adjustments, Moynihan assured that there are no signs of significant stress in credit risk ratings for both consumers and businesses. The overall message from both sectors is one of cautious growth, with a focus on managing resources carefully without drastic cutbacks.

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Blake Hartford is a seasoned financial expert and the lead author at bankonlineusa.com. With a keen interest in finance and technology, Blake delivers the most current and insightful information on banking and investments to readers. He holds a Master’s Degree in Finance from the Wharton School of the University of Pennsylvania. With over twelve years of experience in top financial institutions, Blake specializes in investment strategy and financial planning. At bankonlineusa.com, he ensures all content is meticulously researched and valuable, making complex financial topics easy to understand and engaging for the audience.
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