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Bank of America CEO says 'consumer spending has slowed down'

Bank of America's (BAC) Brian Moynihan said Thursday that US consumer spending “has slowed down” after a series of interest-rate raises from the Federal Reserve.

Speaking at a conference in New York, Moynihan cited less spending on homes and autos as well as restaurants. What consumers spend to dine out, he said, has fallen to 3% year-over-year growth as compared to 17% just three or four months ago.

The slowdown in consumer spending, he said, shows the Fed has “won the war” in its fight to cool the economy and bring down inflation. “Now the question is, they've got to probably maintain.”

Based on expectations for negative economic growth or a “slight recession” for the rest of the year, he doesn’t anticipate interest rates to drop until March or April of 2024.

Brian Moynihan, CEO of Bank of America, talks with reporters at Associated Press headquarters in New York, Tuesday, Nov. 29, 2022. (AP Photo/Seth Wenig)
Brian Moynihan, CEO of Bank of America. (AP Photo/Seth Wenig)

For Bank of America, Moynihan said loan growth will be “a little bit less than we expected” for the second quarter while across the industry lending will be flattish or very low for the foreseeable future.

“That's going to be the economic path honestly,” he said.

He also said he expects banks to lose an additional $500-$750 billion in deposits across the industry after experiencing heavy outflows during the first three months of the year as three banks failed within a matter of days.

Over the last four quarters, banks lost $1.2 trillion in deposits, according to data from the Federal Deposit Insurance Corporation, with nearly half the total in the first quarter of 2023.

Moynihan also expects investment banking fees and trading revenues to be broadly flat this quarter.

Bank of America's stock closed Thursday up slightly to $27.78.

Earlier in the day, Goldman Sachs’ chief operating officer said he expects trading revenues to be down 25% during the second quarter.

Goldman also said it is starting "targeted" employee reductions. The cuts will affect roughly 250 people, according to a person familiar with the situation.

Correction: Consumer spending has slowed following a series of interest rate raises from the Federal Reserve. An earlier version of this story incorrectly stated that spending had slowed following a series of interest rate cuts.

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