Bank of America CEO Moynihan says the consumer is doing well and will keep US economy going

FAN Editor

Bank of America CEO Brian Moynihan is not worried about a potential U.S. economic slowdown as the American consumer is still in a strong place and can keep the economy growing.

“The underlying consumer is doing well and making more money. More importantly, they’re spending more money,” Moynihan told CNBC’s Becky Quick on Wednesday. Moynihan said the bank’s consumer base has spent $2 trillion for 2019 thus far, a 5.9% increase from last year.  “The U.S. consumer continues to spend and that will keep the U.S. economy in good shape.”

His comments come amid increasing fears of a potential economic recession. This has led investors to lower their exposure to riskier assets such as stocks in favor of traditionally safer Treasurys, pushing yields lower and depressing bank stocks. Bank of America shares have dropped more than 12% this month.

Moynihan pointed out that recession fears are arising as a the U.S.-China trade war drags on while the European slows down.

The world’s two biggest economies — China and the U.S. — have been engaged in a trade war since last year. Both countries have slapped tariffs on billions of dollars worth of their goods. In Europe, economic activity has slowed down to the point where the European Central Bank has signaled more stimulus is coming.

However, Moynihan said the world is “getting used” to the U.S.-China trade conflict. “And most people believe that the China situation, which is very difficult, is going to take a long time to resolve fully.”

The ongoing trade war along with slower economic activity overseas contributed to the Federal Reserve cutting rates by 25 basis points last month. Traders also expect the Fed to cut rates again in September, according to the CME Group’s FedWatch tool. President Donald Trump has also said Tuesday he was “thinking about ” cutting payroll taxes.

“The one thing the world can’t afford right now is for the U.S. not to continue its growth cycle,” Moynihan said. “It would be the exact wrong time for the U.S. to have a problem.” 

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