Bank of America CEO Brian Moynihan slammed the Biden administration over its fixation about whether or not we are in an economic recession.
Moynihan, the leader of one of the largest financial institutions in the world, said regardless of the semantic games from The White House, the current economy is causing a real financial burden on people.
“Recession is a word. Whether we are in a recession or not is really not the important thing. It’s what it feels like for the people going through this,” told The Associated Press at the Bank of America Tower in midtown Manhattan.
Politicians have bickered back and forth on whether or not the US is undergoing a recession ahead of the 2022 midterm elections. President Joe Biden claimed on July 28 that the US was not in a recession despite new data showing GDP had contracted for a second straight quarter — meeting the long-accepted definition of a recession.
Meanwhile, Republican critics have said excess federal spending fueled the worst inflation since 1981, hitting an annual rate of 9.1% in June, causing consumer confidence to tumble despite strong monthly job reports.
In response to surging inflation, the Federal Reserve has aggressively raised interest rates and more hikes are expected soon after officials found “little evidence” late last month that US inflation pressures were easing.
Moynihan would not say whether the US economy is in a recession or not, saying that will have to be determined by “a bunch of people in Cambridge, Massachusetts,” — referring to the National Bureau of Economic Research that determines when recessions officially begin and end.
The two biggest factors directly affecting Americans today are gas prices and rent, Moynihan said. Gas prices finally dropped below a national average of $4 last week but had peaked at over $5 in June, according to AAA.
Moynihan, who’s been Bank of America’s top executive since 2010, was more concerned about the rent costs, which don’t fluctuate like gas does.
“Gas prices are coming back down, but rents are going up 10, 12, 15 percent. And rent can end up taking 40% of these households’ income,” Moynihan told AP.
Rent accounts for about one-third of the government’s Consumer Price Index, which showed a year-over-year increase of 8.5% in July, while gas prices continued to fall.
“We are worried about, for the U.S. broad-based consumer, is the increased rents as we go into the natural turn of rents (typically in the fall with school year),” he added.
Moynihan said he still believes the average American consumer is in good shape and should be able to survive this period of economic uncertainty. Americans who have a fixed-rate mortgage largely have locked in low borrowing costs, he said. Credit card balances, while surging, are still lower as a percentage of household income.
“We see no deterioration in consumer behavior from the beginning of the year until now,” he said. While Americans aren’t saving money at previous rates, he said that’s likely due to rising costs.
The CEO added that companies raising wages for workers is also helping Americans get by.
With Post Wires