Bank of America CEO Warned the Economy May Be Changing: Should Consumers Be Worried?
Written by
Lydia Kibet
Edited by
Zuri Anderson
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Bank of America recently reported better-than-expected first-quarter earnings, beating analyst estimates. Its profit jumped 11% to $7.4 billion, or 90 cents per share, from $6.7 billion, or 76 cents per share, in the previous quarter. CEO Brian Moynihan noted that the bank’s overall results were “good” as net interest income rose to $14.4 billion because of lower deposit costs and higher-yielding investments.
Despite the strong performance, Moynihan noted during the banks’ earnings call that consumer spending remains resilient and there are signs that the economy may be starting to shift.
“We potentially face a changing economy,” he said.
What does this mean for the economy, and should consumers be worried?
What This Means for the Economy
While Bank of America isn’t forecasting a recession, Moynihan noted that the odds of a recession have increased recently, but it would be “a very slight recession, and we should fare well on that.”
Moynihan’s comments suggest a potential slowdown in economic growth. The bank’s research team lowered its growth estimates for the U.S. gross domestic product because it doesn’t expect the Fed to cut interest rates this year. However, this doesn’t mean that the economy is headed for a sharp decline. Moynihan is positive and pointed to healthy consumer spending.
Should Consumers Be Worried?
Consumers shouldn’t panic about the looming recession but rather pay attention to economic trends. Moynihan emphasized that consumer spending remains strong.
“Consumers have shown resilience, continuing to spend and maintaining healthy credit quality,” he said.
Financial experts generally recommend that individuals build an emergency fund, review their budgets, limit discretionary spending, and pay down high-interest debt. By doing so, consumers will be prepared for any economic changes ahead.
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