Consumer spending is 20 percent higher this year than 2019, a signal Bank of America (BoA) CEO Brian Moynihan told CNBC is a sign that federal accommodation should go down.
“Accommodation is not needed at the same level clearly,” he said during a Squawk Box interview on Monday (June 14). He also said he expects to see full employment by the end of the year.
“People got a lot of stimulus money and they’ve been spending it,” Moynihan said. “The unemployment rate is coming down and people are going back to work. People can go to amusement parks, they can go on an inside-the-U.S. trip, they can go out to eat. You’re seeing everything open.”
He pointed to the number of transactions over the Zelle payment network for consumers and it’s up 20 percent this year to date, compared to credit and debit transactions volume in 2019. Almost every spending category except travel has shown near full recovery. Travel is still about 15 percent less than in 2019, Moynihan said.
Stimulus payments as of September 2020 were largely used for savings or to pay down personal debt, according to a report by the National Bureau of Economic Research (NBER). Only a small amount was freely spent, respondents indicated. Some 33 percent said they saved the funds, 52 percent paid down debt.
As of May 2021, a study by Visa — its U.S. Spending Momentum Index (SMI) — showed spending reached historic highs, with some 59 percent of consumers spending more than they did a year ago, while 41 percent are spending the same or less.
The Baby Boomer segment is expected to boost spending across numerous verticals, with data from the World Data Lab putting the expected spending power of those 65 old or older at $14 trillion 10 years from now, up from $8.4 trillion in 2020.
On a separate note, Moynihan also discussed with CNBC the dangers presented by cyberattacks and the need for firms and governments to modernize their defenses, especially in light of several recent, high-profile attacks. He said Bank of America now spends over $1 billion a year on cybersecurity–up from $300 or $400 million a year when he took over as CEO 11 years ago.