The CEO of Bank of America, Brian Moynihan, said that the financial giant no longer believes a recession is on the horizon for the American economy, hinting that the Biden administration and Federal Reserve have achieved a “soft landing” after inflation troubles in recent years.
Moynihan told CBS’s Margaret Brennan on “Face the Nation” Sunday that while the economy is slowing, consumer spending remains in line with prepandemic levels.
“Our team is a great team at Bank of America Research; [it] does not have any recession predicted anymore,” Moynihan said. “Last year, this time, it was a recession.”
Moynihan said the consumer spending rate stands at about 3 percent, about half of what it was last year. Consumers are feeling the pressure of high interest rates, though signs are still positive.
“The consumer has slowed down. They have money in their accounts, but they’re depleting a little bit,” he said. “They’re employed, they’re earning money, but if you look at — they’ve really slowed down. So the Fed is in a position they have to be careful that they don’t slow down too much.”
Bank of America predicts two Fed interest rate cuts this year, one at next month’s meeting and one in December. The bank also predicts four rate cuts in 2025, Moynihan said. The Fed opted not to cut rates at its July meeting, going against market predictions.
“So we’re getting back to normal, and that’s going to take a while for people to adjust to,” Moynihan said of cutting rates. “Both on the corporate side and commercial side and on the consumer side.”
Following a weak jobs report last week and no rate cut, American markets quickly dropped, though they have mostly recovered since then. Mortgage rates have also swiftly fallen in recent weeks as vendors prepare for a Fed cut.