U.S. consumers are “in good shape” and will keep spending at an elevated clip, at least in the near term, according to Bank of America CEO Brian Moynihan.
“Consumers are in good shape, not overleveraged,” Moynihan, CEO of the second biggest U.S. bank by assets, told Bloomberg Television from Davos, Switzerland.
The bank’s customers have checking and savings accounts that are still larger than before the pandemic and are spending 10% more so far in May than the year-earlier period, he said.
“What’s going to slow them down? Nothing right now,” Moynihan said.
The Federal Reserve is in the middle of an inflation-fighting campaign that has pummeled markets, especially for formerly high-flying growth stocks. Concern has been mounting that inflation at multidecade highs and a central bank slamming the brakes on easy-money policies will tip the economy into recession. American consumers could help the U.S. avoid that scenario.
“The Fed has this typically very difficult thing of getting them to slow down without slowing down too much,” Moynihan said. “I believe they are going to be able to manage this flow, but it’s going to be tricky.”
Among bank CEOs, Moynihan has been more optimistic that the U.S. can dodge a recession. Earlier this month, JPMorgan Chase CEO Jamie Dimon put the odds at 66% that the U.S. will have some kind of economic slowdown.
“The odds are the following: something like, yes, they can engineer a soft landing, a third of a percent chance,” Dimon told Bloomberg. “Probably a third of a percent chance they can engineer a mild recession …and then there’s a chance this could be much harder than that.”