Current Economic Climate

Bank of America CEO Brian Moynihan shared insights on the ongoing consumer spending trends and overall economic expectations in a recent interview with CNBC. He noted that despite a dip in consumer confidence—reported at its lowest level in nearly three years—spending levels remain robust.

Consumer Behavior and Economic Impact

“We’re in this classic moment … where the consumer is saying, ‘I’m getting more pessimistic,’ in some of the surveys and things like that,” Moynihan emphasized during his appearance on “Squawk Box.” However, he highlighted that actual consumer spending patterns indicate a different story. Although consumers are shifting their expenditures from goods to services, their spending remains strong, suggesting that the economy is likely holding up better than many anticipate.

GDP Growth Predictions

Moynihan projected that the gross domestic product (GDP) growth this year is expected to hover around 2%, a modest decrease from previous trends closer to 3%. He noted that a portion of this slowdown can be attributed to tariffs implemented during the Trump administration, estimating a potential 0.4 percentage point hit to economic growth in the near term as the economy adjusts to these conditions. Nonetheless, he characterized the 2% growth rate as “trend growth,” which has been a long-term goal since the financial crisis of the late 2000s.

Consumer Confidence and Spending Trends

“We see the consumer continue to be solid, and that should bode well for the economy,” Moynihan added, reinforcing the positive outlook despite existing uncertainties. He emphasized the distinction between concerns expressed in surveys and the actual spending behavior of consumers, which continues to be strong.

Federal Reserve’s Stance on Interest Rates

The conversation also coincided with a critical day for the Federal Reserve, which was set to announce its latest interest rate decision. Analysts indicated that the likelihood of a reduction in rates at this meeting was minimal. Moynihan supported this view, suggesting that the Fed might prefer to maintain the current rates through 2026, citing uncertainty over the impacts of tariffs on economic growth.

Future Considerations

“I would think, though that the Fed would be a little cautious about cutting, not knowing what the impact of tariffs is going to be,” Moynihan explained. He advocated for a more conservative approach to rate adjustments, arguing it would be wiser for the Fed to retain its fiscal power until clearer economic trends emerge, especially with growth projected at 2%.

Conclusion

Overall, Moynihan’s remarks underscore a complex economic landscape where consumer spending remains resilient amid broader concerns of inflation and uncertain financial conditions. As the economy continues to navigate these challenges, the role of consumer behavior remains central in shaping future growth trajectories.