Bank of America CEO Brian Moynihan noted on Monday that his customers currently have more money in the bank and are spending more, but warned that supply chain issues, labor shortages and inflation could have an impact on the growth trajectory of the U.S. economy post-pandemic.
All those bottlenecks have to get straightened out, but I think the American consumer is pretty good at spending money, Moynihan told Mornings with Maria on Monday.
Supply chain disruptions have hindered efforts to bolster the U.S. economy during the COVID - 19 pandemic. Key raw materials that are needed for construction and components such as semiconductors are in short supply, while a labor shortage has contributed to a warehouse logjam at major ports.
The issues have impacted consumers in the form of empty shelves and high prices, prompting fears that lower spending will slow the economic recovery.
One day after the Wall Street Journal published a poll conducted this month, Moynihan joined host Maria Bartiromo with host Maria Bartiromo, as constrained supply chains raise prices and, increasingly, reduce output. The newspaper noted that the economists surveyed project dramatic inflation outlooks and low long-term growth projections in July.
Moynihan pointed out that the bank s research team forecasts GDP growth of 5.5 to 6% for this year and 5.2% growth for 2022.
Then for 23 it goes back more to trend growth, he explained.
That tells you that the economy, as big as it was nominally in 19 before Pandemic, is expected to grow twice to three times the rate for the next couple of years, so that s a pretty good place to be, he said.
He then explained what could derail this growth, noting that the question is whether delays in shipping and other means of logistics slow down the spending? All that could get in the way, he acknowledged, before stressing that right now wage growth, spending growth and economy are all strong. Moynihan pointed to information from his bank, saying that at the end of September consumers were spending at a 10 to 12% faster growth rate compared to 2020 which was a bigger year than 2019 in terms of spending. In 2020, the rate was around 20%.
So the spending is larger, it s growing at a faster rate and if you see in the first couple of weeks of October here, we re seeing the same thing so the consumers is in the game of spending, Moynihan said.
He also noted that many consumers have three times more money in their deposit accounts than they did before the pandemic so there is plenty of dry powder in those customers accounts to spend, to do something with it. The key is to make sure inflation stays under control and I think Moynihan has made it clear that they are going to start moving, added the Fed, as he explained what could affect the U.S. macroeconomic picture.
Secondly, get to work on these bottlenecks, helping the free flow of goods. Moynihan also discussed Bank of America's earnings report for the third quarter of 2013 on Monday.
Last week, Bank of America reported earnings and revenue that exceeded Wall Street estimates amid strong growth in its lending and stock-trading units. The bank also benefited from the release of $11 billion in reserves built up during the pandemic.
We tripled revenue year-over-year 3 quarter 2017 to third quarter this year 12% and kept expenses flat at 14.4 billion dollars, Moynihan said Bartiromo, stressing that obviously we had a good rise in earnings. He then explained that more loans, more deposits, strong investment banking and wealth management revenue as well as good trading revenues helped drive that growth.
All the business had good profitability leverage, he added. It is really a normalization of the economy and a continuing drive by the Bank Of America to win the market, no excuses. Moynihan reported that the bank grew for the third quarter by almost a double-digit total growth rate of core debts. The bank is also strong. That means our customers are borrowing a little more, that means the economy is reopening and the economy continues to grow and all of this is good news for America and the world, he said.