(Bloomberg) — The U.S. consumer is holding up well as inflation rises and interest rates climb, Bank of America Corp. Chief Executive Officer Brian Moynihan said.
“There is a lot of dry powder on the consumer side,” Moynihan said in a Bloomberg TV interview with David Westin Wednesday. Account balances are rising and consumers are spending more as they “engage in the economy,” he said.
The Federal Reserve has signaled rate increases over the rest of the year to battle inflation running at a 40-year high, with the March consumer price index climbing 8.5% in March. Policy makers raised the benchmark rate by a quarter-percentage point in March after keeping it near zero for the previous two years.
Moynihan said customers of the bank spent 13% more from their accounts in March than a year earlier, adding that the figure for April so far is up 18%. Spending is rising for travel, entertainment and food, he said.
His comments follow the Charlotte, North Carolina-based bank’s first-quarter earnings earlier this week, which beat analysts’ estimates. Profit got a boost from a record quarter for the equities-trading business and an increase in loan balances. Moynihan said Wednesday that he “feels good” about loan growth at the company.
The largest U.S. banks saw spending on credit cards surge in the first three months of the year as customers began traveling and dining out again after pandemic lockdowns. At the same time loan balances have been increasing.
Labor, Housing
In the wide-ranging interview, Moynihan also touched on housing, labor and cryptocurrencies.
“As rates go up, people are less likely to buy a house,” Moynihan said. Still, lack of supply and strong demand will help support the housing market, he said.
In corporate America, people are starting to return to the workforce, but there is still a shortage of workers, according to Moynihan. Corporations are more concerned about getting employees than they are about the price of rising wages, he said.
Bank of America is bringing back its own staff to the office, including unvaccinated employees, after the Covid-19 pandemic forced many to work from home. The company is focused on retaining talent, with attrition at around 12%, according to the CEO.
“We’re stable” and “feel good, but there’s constant work that needs to be done,” Moynihan said.
Like other major U.S. lenders, Bank of America isn’t active in cryptocurrencies because of regulatory limits, he said.
“We do a very limited activity in futures, but there is not a lot we can do,” Moynihan said. “It’s not allowed, and we will have to see how the regulatory process emerges.”
(Updates with additional CEO comments starting in sixth paragraph.)
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