Consumption Jumps 4% Despite High Interest Rates...BofA CEO "U.S. Economy Will Never Break"

▲ U.S., consumption, economic indicators/AI generated image

It has been diagnosed that the U.S. economy is not easily faltering despite high interest rates, as consumption, employment, and credit indicators remain more robust than expected.

Bank of America (BofA) CEO Brian Moynihan stated in an interview with Jim Cramer, host of CNBC TV show Mad Money, on September 10 (local time) that U.S. consumption remains strong. Bank of America customers' spending in August increased by about 4% compared to the same month last year. Although this is lower than the 5% growth rate of the previous quarter, Moynihan said it is “consistent with a strong economic growth trend.” He also explained that consumer delinquencies and credit card charge-off indicators are at their best levels in recent years.

He also viewed companies' financial situations as relatively stable. Companies are continuing investments by utilizing their credit lines, and their credit status is good, he explained. However, high interest rates are placing a greater burden on small and medium-sized enterprises that rely heavily on short-term loans. Moynihan expects the U.S. economy to grow in the mid-2% range this year and said, “Even if the Fed raises interest rates, I believe the economy will continue to grow.”

Moynihan emphasized that wage recovery is notable among low-income households. According to Bank of America's analysis of customer data by income level, wages for low-income households increased by approximately 3.5-4%. Their spending growth rate also rose. Moynihan explained that the wage growth, which had slowed since COVID-19, is now reviving. He added that unemployment and new unemployment claims remain at low levels.

He stated that the spread of AI has not led to a reduction in hiring. Bank of America hires 2,000 summer interns annually from approximately 400 schools and maintains its hiring scale. Moynihan explained that while AI enhances analyst productivity in investment banking, many personnel are still needed in other areas. He emphasized the importance of AI proficiency by quoting a past remark from Uber's CEO: “You won't lose your job to AI, but you might lose it to someone who knows how to use AI well.”

In cybersecurity, he diagnosed that AI is accelerating both offensive and defensive speeds. Bank of America employs over 3,000 personnel in cybersecurity. He explained that while AI can quickly identify vulnerabilities, the same technology can be used to more rapidly enhance defense systems. Moynihan stated that AI model developers should strengthen safeguards and focus on reducing the potential for misuse rather than hindering innovation.

[Article Key Summary]

-Bank of America customers' spending in August increased by approximately 4% compared to the same month last year, and consumer credit indicators remained at a good level in recent years.

-Moynihan predicted the U.S. economy would grow in the mid-2% range this year and stated that wages for low-income households increased by approximately 3.5-4%.

-Despite the spread of AI, Bank of America maintains its annual hiring of 2,000 summer interns and views AI proficiency as a core competitive advantage.

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