(Bloomberg) - US consumers are still in a position of strength despite persistent inflation and other economic headwinds, Bank of America Corp. Chief Executive Officer Brian Moynihan said.
Americans continue to spend, though the rate of growth in spending is slowing, and they still have capacity to borrow, Moynihan said Tuesday at the BofA Securities Financial Services Conference. That stability is causing continued tension for the Federal Reserve, which has been boosting interest rates in an attempt to damp rising costs.
“It’s a very slow rate of spend,” Moynihan said.
US consumer prices rose briskly at the start of the year, according to data out Tuesday from the Bureau of Labor Statistics, a sign of persistent inflationary pressures that could push the Fed to raise interest rates even higher than previously expected. The overall consumer price index climbed 0.5% in January, the most in three months, bolstered by energy and shelter costs. The measure was up 6.4% from a year earlier.
Moynihan’s comments come as Bank of America looks to reward its best employees while keeping a lid on expenses. The firm has already been forced to scale back on hiring plans, even as it added headcount in the fourth quarter. Net income in 2022 fell to $27.5 billion from a record $32 billion the prior year.
Bank of America is focused on bringing expenses down and headcount back in line with historic norms, a reversal from the hiring “engine,” which was “cranking” during the war for talent last year, Moynihan said Tuesday. Investments in digital platforms have helped keep headcount at Bank of America’s branches flat even as interactions with customers rise, he said.
The prospect of a US recession looks further off, Moynihan said Tuesday, with bank analysts moving out their original prediction to the third or fourth quarter of this year. Moynihan’s counterpart at Goldman Sachs Group Inc. echoed that sentiment at a Credit Suisse Group AG conference Tuesday.
“The consensus has shifted to be a little bit more dovish in the CEO community that we can navigate through this with a softer economic landing,” Goldman CEO David Solomon said. “The chance of a softer landing feels better than it did six to nine months ago,” he said, adding that his firm will have a “much tighter hiring plan in 2023.”
Moynihan, 63, was promoted to CEO of Bank of America in 2010 in the wake of the global financial crisis, and has steered the lender through the pandemic. He has signaled his interest in staying on for years to come.
By Katherine Doherty
