Consumers, businesses have turned cautious

Consumer spending through card payments, checks and ATM withdrawals increased about 3.5% this year to about $4 trillion, Moynihan said. This is a marked slowdown from the nearly 10% growth rate seen in May 2023, he said.

“Both of our constituencies, who have a lot to do with how the American economy works, are saying, ‘You know what? I’m being careful, I’m slowing things down,'” Moynihan said, referring to consumers and businesses.

The slowdown began last summer and is consistent with the “very low growth” environment of the 2016 to 2018 period, he said.

Nearly a year after the Federal Reserve’s last rate hike, consumers and businesses are grappling with inflation and borrowing costs that remain higher than they are accustomed to. The Fed began its efforts to control inflation by raising its benchmark rate starting in March 2022, hoping to slow the economy without tipping it into recession.

Many economists believe the Fed is on track to achieve this feat, which has helped the stock market reach new highs this year. But consumers are still grappling with higher prices for goods and services, which has impacted U.S. businesses from McDonald’s to discount retailers as Americans adapt their behavior.

Grocery shoppers are visiting more stores looking for deals, according to Moynihan. “They’re going to three grocery stores instead of two, that’s one of the statistics we’re seeing,” he said.

The now tepid growth in overall spending is supported by travel and entertainment, while “other things have moderated except insurance payments,” Moynihan said. Rent growth has slowed, he noted.

“We need to keep the consumer in the game in the American economy, because (they are) a very important part of it,” Moynihan said. “They become a little more fragile, and that’s due to everything that’s going on around them.”

The same goes for small and mid-sized businesses, the Bank of America CEO said. His company is the second largest U.S. bank by assets, after JPMorgan Chase. Moynihan and other bank CEOs have a bird’s-eye view of the economy, given their coverage of households and businesses from coast to coast.

Business owners say, “I still feel good about my business overall, but I’m not hiring as much.” I don’t buy equipment that quickly. I don’t buy software that quickly,” Moynihan said.

The bank’s economists estimate that it will take until the end of next year for inflation to be brought under control and that the Fed will begin cutting interest rates later this year, Moynihan said. The U.S. economy will likely grow about 2 percent, avoiding recession, he added.

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Sara Adm

Aimant les mots, Sara Smith a commencé à écrire dès son plus jeune âge. En tant qu'éditeur en chef de son journal scolaire, il met en valeur ses compétences en racontant des récits impactants. Smith a ensuite étudié le journalisme à l'université Columbia, où il est diplômé en tête de sa classe. Après avoir étudié au New York Times, Sara décroche un poste de journaliste de nouvelles. Depuis dix ans, il a couvert des événements majeurs tels que les élections présidentielles et les catastrophes naturelles. Il a été acclamé pour sa capacité à créer des récits captivants qui capturent l'expérience humaine.
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