Exclusive: Bank of America CEO bullish on economy powered by spending
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Photo: Brian Moynihan speaks at Axios House on July 15.
Affordability pain is real, but resilient consumers are still infusing money into the economy, Brian Moynihan, CEO of Bank of America, said at the Axios House News Shapers summit in Washington, D.C.
Why it matters: The U.S. economy sits on a remarkably durable foundation, supporting consumer spending even with hot inflation. But at the same time, Americans tell pollsters economic conditions is at rock bottom, fueling a political reckoning over affordability.
- "There's a say-do paradox," Moynihan said. "The question is, what are people actually doing?"
Driving the news: Two things can be true, Moynihan explained to Axios' Mike Allen.
- "Affordability is a real issue," he said. But he added, "what people are doing is still spending money, and that's good for the U.S. economy in the broadest context."
- To that point, Moynihan said consumer spending had grown about 6% in the second quarter compared to last year. Based on that, he predicts the economy will grow this year by at least 2%.
Case in point: The World Cup brought a global party to U.S. shores, boosting retail activity across host cities, on average, Bank of America research found.
- In the three weeks ending June 27, brick-and-mortar spending at restaurants and bars was up 5.3% year-over-year in the host cities, per aggregated credit and debit card data, versus 3.8% in the rest of the US.
- Those host cities lagged the rest of the US in the prior three weeks. And that doesn't cover spending by international tourists, so the tournament likely juiced retain activity even more.
- Bank of America was the official bank sponsor of the World Cup — but left an unexpected mark with its viral collectable fan charm bracelets.
Flashback: Moynihan's optimism about the broader economy has been buoyant through tariff- and war-inflicted financial uncertainty.
- Speaking with Axios in January, Moynihan signaled bullishness on the American economy, saying that consumers kept spending, despite their sagging sentiment.
- Applauding BofA's jump in revenue from last year in a recent statement, Moynihan pointed to "a healthy economic backdrop" and "resilient consumers."
What to watch: Moynihan has known Fed Chair Kevin Warsh since the George W. Bush administration and said he expects continuity, not disruption, at the Fed. "I think he'll be a traditionalist," he says.
- "He believes the Fed has a lane to stay in, and they just stay in that lane."
- He added, "overall, the U.S. economy is not a central bank-led economy."
Yes, but: Warsh has called for "regime change" at the central bank.
The bottom line: Moynihan's signaled an approach to understanding the economy that relies less on reading the tea leaves at the Federal Reserve and instead watching what people are actually doing in the economy.
- "The best time in the economy is when nobody knows what the Fed does," he says, "because that means we're all focused on the real economy."
Go deeper: Bank of America chief talks America's "uncorked" economy
