BofA CEO Says U.S. Consumer Spending Is Fine as August Spending Rises 4%

【Financial News, New York — Reporter Lee Byung-chul】  A diagnosis has emerged that U.S. consumer spending remains resilient, even as crude oil prices surpass $100 a barrel and increase the burden on American households. According to proprietary data from Bank of America, one of the largest banks in the United States, consumer spending in August rose 4% from the same month a year earlier. Concerns remain, however, that prolonged high oil prices could squeeze households’ spending power.
According to CNBC on the 10th local time, BofA CEO Brian Moynihan appeared on CNBC’s “Mad Money” the previous day and said consumers had spent and consumed more in August than during the same period a year earlier. “The growth rate was 5% last quarter,” he said, adding, “Spending continues to move along in a resilient way, and that is consistent with an economy that is growing strongly.”
Moynihan made the remarks as crude oil prices surged amid heightened tensions between the United States and Iran. Brent crude surpassed $100 a barrel on the 9th. U.S. gasoline prices also exceeded $4 a gallon throughout August for the first time ever.
High oil prices could directly weigh on consumer spending, which accounts for about 70% of the U.S. economy. When gasoline prices rise, households must spend more on fuel, leaving them with less disposable income for goods and services.
However, the spending trends identified by BofA through transactions involving millions of customers have not yet shown clear signs of contraction.
“Every indicator we are looking at is fine,” Moynihan said.
BofA’s latest proprietary analysis shows a similar trend. According to the BofA Institute, card spending in July increased 5.0% from the same month a year earlier. Spending excluding gasoline also rose 4.3%. Despite pressure from rising living costs, the share of households paying their credit-card bills in full each month also increased.
Moynihan also offered an optimistic assessment of the credit health of U.S. households. He dismissed concerns over U.S. credit-card balances, which have risen to a record level, saying, “Credit-related indicators are at their best level in several years.”
“We hear that outstanding credit-card balances are at an all-time high, but the economy itself has grown 40%,” Moynihan explained. “What we are seeing now is a process of returning to the level of a long-term trend.”
He also assessed the corporate sector as still resilient. Companies continue to borrow, invest and use their existing credit lines, he said.
However, he noted that the impact of high interest rates is being felt mainly by small and midsize businesses. These companies rely relatively heavily on short-term credit lines, and higher rates have sharply increased their borrowing costs.
“That is where the impact of high interest rates is most pronounced,” Moynihan said. “Companies are still borrowing money and using their credit lines, and the quality of credit remains sound.”
A gap has emerged, however, between BofA’s actual transaction data and consumer sentiment. The August Survey of Consumer Expectations recently released by the Federal Reserve Bank of New York (FRBNY) showed growing concerns among U.S. households about their personal finances and the labor market. In particular, the share of consumers expecting the unemployment rate to be higher a year from now reached its highest level since April 2020, when the COVID-19 shock was at its peak.




[email protected] Reporter Lee Byung-chul Reporter