Bank of America CEO and Chairman Brian Moynihan discusses Fed rate hikes, consumer strength in 2024, and regulation of big banks.
With many economists and Americans recently confirming they are feeling the pressures of a recession, the head of one of the country’s largest banks offers his pulse on how people are spending their money and how that is affecting the markets.
“People who had an account with us in January 2020 before the pandemic, if you look at them now, they still have a lot more money, even after adjusting for inflation, a lot more in their account,” Bank of America Chairman and CEO Brian Moynihan said on CBS’s “Face the Nation.”
The problem is, [that] “Their money has started to decline, which indicates that they are now using this money to maintain their lifestyle,” he added.
According to a recent survey by Bankrate, at least 50% of Americans are carrying a higher balance today, on a monthly basis, than they were in March 2020. That’s up from 44% in January.
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This comes as credit card debt hit another record high last week, rising to $1.14 trillion, up $27 billion, or about 1%, from the previous quarter, according to Federal Reserve data. That’s the highest level on record in Fed data dating back to 2003.
Bank of America Chairman and CEO Brian Moynihan explained how consumers spend on CBS’s “Face the Nation.” (Getty Images)
However, Moynihan noted that the bank has noticed that consumers are pulling back a bit on their spending throughout the summer months of 2024 — but when they do spend, it’s at restaurants or while traveling.
“But on the other hand, they spend a little less. They go to the grocery store the same number of times, [they’re] “They’re spending a little bit less, which means they’re finding deals and things like that,” Moynihan said. “And you see companies cutting prices in response. That’s the way the economy works, and it’s slowing down.”
Mark Tepper, a multibillion-dollar money manager and CEO of Strategic Wealth Partners, told Fox News Digital in a recent interview that he also believes record debt is due to lifestyle spending habits.
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“The fact that a family of four received over $10,000 in stimulus checks [in 2021]“When it’s not necessary, it leads to consumer addiction,” Tepper says. “And when you live paycheck to paycheck your whole life, and suddenly you spend an extra $10,000, you’re elevating your lifestyle to a higher level.”
“For anyone who has ever elevated their quality of life to a higher level, when those $10,000 checks are no longer coming into their mailbox, it’s going to be very difficult for that consumer to get their quality of life back to what it was before,” he explained.
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After the Federal Reserve’s latest meeting left investors widely expecting a rate cut in September, the central bank’s chief executive warned of a “significant” slowdown.
“Right now, spending is flat,” he said in an interview with CBS. “Brian Moynihan is advising caution and not to start cutting rates, to restore a sense of light at the end of the tunnel. They’ve told people that rates probably won’t go up, but if they don’t start cutting them relatively soon, it could frustrate the American consumer.”
FOX Business’ Megan Heaney contributed to this report.
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