- Consumer spending picking up in reopening areas, Moynihan says
- ‘Not seeing the type of credit damage that you’d expect’
Chief Executive Officer said consumer spending is picking up in some areas of the U.S. as government relief programs cushion the credit impact of the pandemic.
“These measures taken by Congress, by the administration and by the Fed have worked to offset the unfortunate aspects of very high unemployment — and so far, you’re not seeing delinquencies and things rise,” Moynihan said in a Bloomberg Television interview Tuesday. “We expect to see charge-offs coming later on, as this thing goes on, but the reality is right now you’re not seeing the type of credit damage that you’d expect to see with this amount of downdraft in activity.”
Consumer spending is down 2% to 4% this month from a year earlier, and is picking up faster in areas of the country that are reopening, he said. In China, it surged when stay-at-home orders were lifted, but then declined.
“That’s what we have to watch in the United States — there’ll be a burst of activity in some of these places” as people emerge from their homes, but the question is whether they’ll sustain spending on larger purchases such as cars or homes, Moynihan said. While the economy won’t recover to its pre-pandemic size until the end of next year, there are likely to be incremental gains until then, he said.
Here are other takeaways from the interview:
- The lender has granted about 1.5 million payment deferrals. About 35% to 40% of people who asked to delay their credit-card bills ended up paying them anyway, he said.
- Bank of America has processed 320,000 small-business relief loans with an average balance of $80,000. Of those, 98% are for companies with fewer than 100 employees.
- High-grade debt issuance will probably have another record month in May after Fed programs stabilized the market, he said. High-yield debt will have a strong month, while convertible bond and equity deals are starting to be done. “The stabilization and the fact those facilities aren’t all used, it’s actually a good thing because that means the market’s doing what they’re doing and providing capital,” Moynihan said.
- In terms of returning employees to bank offices, “we’ll go back slowly,” he said.
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