More On: Brian Moynihan
Brian Moynihan, the CEO of Bank of America, criticized the Biden administration for being so focused on whether or not the economy is in a recession.
Moynihan, who runs one of the largest financial institutions in the world, said that the current economy is putting a real financial strain on people, no matter what the White House says.
"Recession is just a word. It doesn't really matter if we are in a recession or not. It's how it feels for the people going through this," he told The Associated Press at the Bank of America Tower in midtown Manhattan.
Before the midterm elections in 2022, politicians have gone back and forth on whether or not the US is in a recession. President Joe Biden said on July 28 that the US was not in a recession, even though new data showed that GDP had shrunk for the second quarter in a row, which is how a recession has always been defined.
Also, Republican critics have said that too much federal spending led to the highest inflation rate since 1981, which was 9.1% per year in June. This caused consumer confidence to drop, even though monthly job reports were good.
In response to rising inflation, the Federal Reserve has raised interest rates quickly, and more increases are likely soon after officials found "little evidence" at the end of last month that US inflation pressures were easing.
Moynihan wouldn't say if the US economy is in a recession or not. He said that "a bunch of people in Cambridge, Massachusetts" would have to figure that out. He was talking about the National Bureau of Economic Research, which decides when recessions start and end.
Moynihan said that gas prices and rent are the two things that affect Americans the most right now. AAA says that gas prices hit their highest point in June, when they were over $5 on average across the country. Last week, they finally fell below $4.
Moynihan, who has been the CEO of Bank of America since 2010, was more worried about the rent prices, which don't change as much as gas prices do.
"The price of gas is going down again, but rents are going up by 10, 12, or 15%. "Rent can end up costing these families as much as 40% of their income," Moynihan told AP.
About one-third of the government's Consumer Price Index is made up of rent. In July, rent went up 8.5% from a year ago, while gas prices kept going down.
"For the average U.S. consumer, we are worried about rising rents as we move into the natural turn of rents (usually in the fall when school starts)," he said.
Moynihan said he still thinks the average American consumer is in good shape and should be able to get through this time of economic uncertainty. He said that most Americans who have a fixed-rate mortgage have locked in low costs to borrow. Even though credit card balances are going up, they are still a smaller share of household income.
"We haven't seen any change in how people act since the beginning of the year," he said. He said that Americans aren't saving as much money as they used to because prices are going up.
The CEO also said that when companies pay their workers more, it helps Americans get by.