Bank of America CEO reveals where US consumer money is going and the 'problem' with it
BofA CEO Brian Moynihan says customers are using more money to ‘maintain a lifestyle’
Bank of America CEO and Chairman Brian Moynihan discusses the Fed's rate hikes, 2024 consumer strength and big bank regulation.
With many economists and Americans recently confirming their feelings of recessionary pressures, the head of one of the country’s largest banks is giving his pulse on how people are spending their money and their impact on markets.
"The people who had an account with us in January 2020 before the pandemic, you look at them now, they're still sitting with much more, even inflation adjusted, much more in their account," Bank of America Chairman and CEO Brian Moynihan said on CBS’ "Face the Nation."
"The problem is, [that] has started drifting down, which indicates that they're using that money now to maintain a lifestyle," he added.
At least 50% of Americans are carrying a higher balance today, on a month-to-month basis, than they were in March 2020, according to a recent survey from Bankrate. This is up from just the 44% recorded this past January.
This comes at the same time that credit card debt hit another record high last week, rising to $1.14 trillion, an increase of $27 billion, or about 1%, from the previous quarter, Fed data shows. It marks the highest level on record in Fed data dating back to 2003.
Bank of America Chairman and CEO Brian Moynihan detailed how the consumer is spending on CBS "Face the Nation." (Getty Images)
However, Moynihan pointed out that the bank has noticed consumers pulling slightly back on their spending throughout the 2024 summer months – but when they spend, it’s at restaurants or on travel.
"But on the other hand, they are spending a little bit less. They're going to the food store the same number of times, [they’re] spending a little bit less, which means they're basically finding bargains and things like that," Moynihan said. "And you're seeing corporations cut prices to respond to that. And so it's the way the economy works, and it's slowing down."
Multi-billion dollar money manager Mark Tepper, the 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 was unnecessary, that causes an addiction to consumption," Tepper said. "And when you are living paycheck to paycheck your entire life, and suddenly you have an extra $10,000 spent, you ratchet your lifestyle higher."
"And for anybody that has ever ratcheted their lifestyle higher, when those $10,000 checks are no longer hitting your mailbox, it is incredibly difficult for that consumer to then ratchet their lifestyle back down to where it was before," he further explained.
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After the Federal Reserve’s latest meeting left investors widely predicting a rate cut this September, the big bank CEO cautioned the central bank not to slow down "too much."
"Right now, where they are spending at is consistent," he said on CBS. "Brian Moynihan giving advice – is going to be more careful to the downside of not starting to move down rates, to restore a feeling that there's light at the end of the tunnel. They've told people rates probably aren't going to go up, but if they don't start taking them down relatively soon, you could dispirit the American consumer."
FOX Business’ Megan Henney contributed to this report.