Bank of America CEO Brian Moynihan said the financial giant no longer sees a recession approaching for the U.S. economy, suggesting the Biden administration and the Federal Reserve have achieved a “soft landing” after inflationary problems in recent years.
Moynihan told CBS’ Margaret Brennan on “Face the Nation” on Sunday that although the economy is slowing, consumer spending is holding up at pre-pandemic levels.
“Bank of America’s talented research team is no longer predicting a recession,” Moynihan said. “This time last year, there was a recession.”
Moynihan said consumer spending rates are about 3%, about half of what they were last year, and while consumers are feeling the pressure of higher interest rates, the signs are still positive.
“Consumers are slowing down. They have money in their accounts, but it’s slowly trickling away,” he said. “Consumers are getting employed, they’re earning income, but if you look closely, it’s really slowing down. So the Fed is in a position where they have to be careful not to slow down too much.”
Bank of America expects two rate cuts this year, at its meeting next month and its December meeting, and four cuts in 2025, Moynihan said. The Fed held off on a rate cut at its July meeting, contrary to market expectations.
“We’re getting back to normal, but it’s going to take some time for people to adjust to it — both on the business side, on the commercial side and also on the consumer side,” Moynihan said of the rate cuts.
U.S. markets have mostly recovered since a sharp sell-off last week following weak employment data and a lack of interest rate cuts, and mortgage rates have also fallen sharply in recent weeks as sellers prepare for a Fed rate cut.
