The recent argument about whether the American economy is formally in a recession or not, according to Bank of America CEO, is unimportant.
The CEO of Bank of America said the recent argument over whether the American economy is officially in a recession or not is irrelevant. NEW YORK (AP) What matters is that the most vulnerable people are being badly impacted by the economy right now.
“The word recession exists. It doesn’t matter whether or not we are in a recession. In an interview with The Associated Press at the Bank of America Tower in midtown Manhattan, where he discussed inflation, the present situation of the economy, as well as the health of the American consumer, Brian Moynihan said, “It’s what it feels like for the people suffering through this.
In preparation for the 2022 midterm elections, the debate over whether the U.S. economy is in a recession has become politicized. While U.S. consumer confidence is declining and inflation is at levels last seen in the early 1980s, other economic indicators, such as the monthly jobs report, are still positive. The Federal Reserve has been rapidly boosting interest rates in reaction to high consumer and wholesale prices to curb inflation without doing too much economic harm.
However, Moynihan listed gas prices and rent as two significant problems that have a detrimental impact on typical Americans as reasons to be concerned. Before dropping down below $4 last week, the national average cost of a gallon of gasoline soared to just over $5 in June. Rent increases, which don’t fluctuate as much as gas prices, seemed to worry Moynihan more.
Gas costs are declining again, yet rents are rising by 10, 12, or 15%. Furthermore, Moynihan noted that rent “may end up consuming 40% of these households’ income.” About one-third of the government’s Consumer Price Index, which increased by 8.5% year over year in July, is made up of rent.
The typical American consumer came into this time of rising inflation and economic unrest in sound financial standing. The American government spent trillions of dollars on pandemic relief measures like extending jobless benefits. As a result, Americans were saving more money than usual and paying off their debts more quickly than historical norms. These economic initiatives mainly came to an end in 2017.
Overall, the American consumer is still in good form and able to survive the economic upheaval, according to Moynihan, as he has stated in past interviews. He claims that Americans with fixed-rate mortgages have, for the most part, locked in low borrowing costs and that, despite rising, credit card balances still represent a smaller fraction of household income.
According to him, there has been no change in consumer behavior since the start of the year. He acknowledged that Americans’ ability to save money has slowed, which is probably because prices are going up.
Companies are still rising wages, according to Moynihan, which is assisting Americans in coping. Bank of America has increased salaries for its own 200,000+ employees to assist them to cope with rising costs. Depending on longevity, the corporation granted raises of up to 7% to employees who earned less than $100,000. That excludes the regular merit raise cycle for the company as well.
People are dealing with this better because of the hikes, he claimed.
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