Bank of America CEO Confident on Economy as Consumers Spend at Highest Rate He's Ever Seen

Bank of America's CEO said that a surge in spending, even as prices are on the rise, has given him confidence in the economy amid recovery from the COVID-19 pandemic-driven recession.

Brian Moynihan told the Associated Press in an interview that consumers are spending "at a faster rate" than he's ever seen, and spending on the bank's debit and credit cards has risen.

Still, he remains concerned about the potential impact of inflation and supply-chain issues on the economy heading into the winter season. The U.S. government said Friday that prices for Americans rose 6.8 percent in November compared to the previous year, with growing costs for things like food and energy driving the highest annual inflation rate in 39 years.

Consumer sentiment, an economic indicator that can help predict future spending and saving, hit a 10-year low in early November, according to the University of Michigan's index. Moynihan said that the recent decline might point to higher frustration among Americans because of the inflated costs.

"[The consumer] is earning more money, but now they are worried that these costs are going to go up faster than their wages," Moynihan said. "Also, frankly, the constant ebb and flow of this virus weighs on people's minds over time."

For now, the strong consumer spending despite the growing costs, coupled with factors like higher wages and lower unemployment rates, leaves Moynihan confident about the economy's current standing.

Bank of American CEO
Bank of America CEO and Chairman Brian Moynihan said consumers are spending “at a faster rate” than he’s ever seen, but he remains concerned as to how inflation and supply-chain issues will influence the economy going into the winter. Above, Moynihan speaks during the UN Climate Change Conference COP26 in Glasgow, Scotland, on November 2, 2021. Hannah McKay/Pool via AP

Moynihan took over Bank of America in 2010, at a time when the bank was posting billions of dollars in losses from bad bets on the housing market as well as its ill-timed purchase of Merrill Lynch. He's been largely credited with cleaning up the banking giant's troubles and returning it to record profitability and fewer losses.

More recently, Moynihan has had to navigate the bank through a second far-reaching crisis: the coronavirus pandemic. 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.

Now, nearly two years into the pandemic, Moynihan said he's feeling confident about where the economy stands. He said debit and credit card spending for Thanksgiving Day through Cyber Monday rose 13 percent from 2019 levels. For the month of November, spending on the bank's credit and debit cards was up 27 percent compared to November 2019.

"The U.S. consumer is spending 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 said.

These remarks echoed similar comments made by Al Kelly, CEO of payments processer Visa, last month in an interview with AP.

Moynihan says the increase in consumers spending on Bank of America's network is happening mainly in entertainment, travel and restaurants. While gasoline prices are sharply higher from a year ago, gas purchases make up on 5 percent of the total spending on the bank's credit and debit cards.

Supply-chain problems, which have caused businesses to scramble for raw material and finished goods, are also not translating into a restraint on consumers' willingness to go shopping.

"I'm not sure 'lack of opportunity to spend' is the consumers' issue right now," he said. "Are they buying exactly what they wanted? No, there's shortages on some items. But they're finding things to buy."

Moynihan attributes a good part of the strong economic recovery to the trillions of dollars in government intervention that came as a result of the pandemic. The rollout of the COVID-19 vaccine in a year's time, as well as government support through stimulus, has allowed economies to reopen and consumers to keep their balance sheets healthy. The Federal Reserve also cut interest rates to near-zero levels and restarted its Great Recession bond-buying program to keep up economic demand as well.

"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," Moynihan said.

He also attributes part of the recovery to the banking industry. Banks were financially healthy heading into the pandemic and able to withstand hundreds of billions of dollars in losses without putting any of them at risk of failing, due in large part to the Dodd-Frank Act passed after the financial crisis.

"You had a financial services industry really stepped in this time to do its part to make sure everything got where it supposed do," he said, referring to stimulus payments as well as the Paycheck Protection Program. The program to aid small businesses was administered by the Small Business Administration but run through the banking industry.

The Associated Press contributed to this report.

U.S. Spending
Bank of America’s CEO said that a surge in consumer spending, even as prices are on the rise, has given him confidence in the economy amid recovery from the COVID-19 pandemic-driven recession. Above, a shopper pushes her cart full of items during a Black Friday sale at Macy's on November 26, 2021, in Indianapolis. Darron Cummings/AP Photo