- Bank of America (BAC) CEO Brian Moynihan stated the economy is performing “better than people think,” with consumer spending up 6% from Q1 2024, shifting toward entertainment and services, despite growing pessimism.
- Moynihan expects a 40 basis point growth hit in H1 due to sticky inflation worsened by tariffs, yet forecasts 2% annual growth, with no recession anticipated by his bank.
- He highlighted tariffs prompting supply chain reviews and sees lower regulation as a national benefit, reflecting confidence in economic strength.
Bank of America (BAC) CEO Brian Moynihan, speaking on CNBC this morning, painted a cautiously optimistic picture of the U.S. economy, asserting that it is performing “better than people think” despite persistent inflationary pressures and shifting consumer behaviors. He highlighted that consumers are injecting 6% more money into the economy compared to the first quarter of 2024, with spending levels steadily climbing, even as sentiment turns more pessimistic. Moynihan pointed to a notable pivot in consumer priorities, with increased spending on entertainment and services signaling resilience in discretionary sectors, a trend that aligns with broader economic adaptability amid evolving global dynamics.
Moynihan projected economic growth closer to 2% for the year, a figure tempered by his expectation of a 40 basis point drag on growth in the first half, largely attributed to sticky inflation exacerbated by tariffs. He noted that inflation, already a stubborn challenge, could become further entrenched due to these trade policies, which are prompting companies to reassess their supply chains—a move that could ripple through costs and pricing structures. Despite these headwinds, Moynihan’s bank does not foresee a recession, a stance that contrasts with more bearish outlooks and underscores confidence in the economy’s underlying strength, bolstered by consumer activity and a potential easing of regulatory burdens, which he believes will benefit the nation.
The CEO’s insights reflect a nuanced view of an economy at a crossroads, where robust consumer spending – up 6% from Q1 2024 – coexists with challenges like tariffs and inflation that could shave growth by 40 basis points in the near term. His expectation of 2% annual growth suggests a steady, if unspectacular, trajectory, supported by a shift toward services and entertainment that may cushion against broader uncertainties. Moynihan’s emphasis on deregulation as a positive force aligns with current policy discussions, hinting at a favorable environment for banks and businesses navigating tariff-driven supply chain recalibrations, all while inflation remains a wildcard in the economic equation.
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