Bank of America (BOFA) CEO Brian Moynihan said the Biden administration is out of touch and fighting a battle of semantics instead of acknowledging the very real pressures Americans are enduring amid record-high inflation.
Stocks fell sharply on Wednesday, and if that weren’t enough, the number of people with at least $1 million in their Fidelity 401(k) accounts plummeted 29 percent in the second quarter, and the number of IRA millionaires in Fidelity fell 17 percent compared to the previous year.
BOFA’s CEO since 2010, Moynihan maintained that “a bunch of people in Cambridge, Massachusetts” are the ones who decide if the U.S. is technically in a recession – and thus he would not commit – but he added the White House’s attempt to spin the concept of recession is not helpful in the least.
“Recession is a word. Whether we are in a recession or not is really not the important thing,” he said in an Associated Press interview Thursday.
“It’s what it feels like for the people going through this.”
The Federal Reserve has been raising interest rates in order to tamp down the surging inflation, nevertheless, a dollar will simply not go as far as it once did, and it wasn’t that long ago.
Moynihan says the two issues of the most concern to him are gas prices and rent. Rent, he says, doesn’t tend to fluctuate the way gas prices do, but historical trends haven’t kept the price of rent from going up.
“Gas prices are coming back down, but rents are going up 10, 12, 15 percent. And rent can end up taking 40 percent of these households’ income,” Moynihan said.
“We are worried about, for the U.S. broad-based consumer, is the increased rents as we go into the natural turn of rents (typically in the fall with school year),” he added.
Rent accounts for roughly one-third of the Consumer Price Index, which landed at an 8.5 percent elevation in July, the AP reported.
Moynihan said despite the calamity right before our lying eyes, he remains confident that the U.S. is in good overall shape economically.
“We see no deterioration in consumer behavior from the beginning of the year until now,” he said.
The BOFA CEO has been optimistic about the ability of the U.S. economy to withstand turbulence before. In December, he explained “(The consumer) is earning more money, but now they are worried that these costs are going to go up faster than their wages,” he said. “Also, frankly, the constant ebb and flow of this virus weighs on people’s minds over time.”
“The U.S. consumer is spending money a lot of money, spending at a faster rate than I have ever seen, and I’ve been tracking this data for 15 years. We flooded the zone with all this fiscal stimulus and accommodative monetary policy and we were able to bring this huge economy back out of recession relatively quickly,” Moynihan said at the time.
For its part, Bank of America has increased base pay among its 200,000-plus employees in order to ease the financial onslaught. Employees making less than $100,000 a year saw an increase of as much as seven percent, depending upon longevity.
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