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Bank of America CEO: Consumers, Businesses Pulling Back on Spending

Brian Moynihan, CEO of Bank of America, said higher inflation and interest rates have dampened consumer and business spending this year.

From hardware to software, both consumers and small to medium-sized businesses are pulling back on their purchases, Moynihan said at a New York financial conference, according to a Thursday (May 30) CNBC report.

“Both of our customer bases that have a lot to do with how the American economy runs are saying, ‘You know what? I’m being careful, slowing things down,’” Moynihan said, referring to consumers and businesses, according to the report.

Consumer spending, particularly through card payments, checks and ATM withdrawals, only grew 3.5% this year, compared to last May’s 10% growth, Moynihan noted, adding that the pullback is consistent with the “very low growth” environment of the period from 2016 through 2018.

Likewise, business owners continue to be careful with their spending.

Business owners are saying, “‘I still feel good about my overall business, but I’m not hiring as much. I’m not buying equipment as fast. I’m not making software purchases as fast,’” Moynihan said, according to the report.

The CEO’s comments are in line with recent data released by the Bureau of Economic Analysis, which also suggested that consumers are cutting back on their spending.

The bureau’s Thursday news release noted a “downward revision” for consumer spending. Personal consumption still grew, but at 2%, from the initial 2.5% reading.

The bureau also found that prices continued to rise, as the personal consumption expenditures price index increased 3.4% in the first quarter, compared with an increase of 1.8% in the fourth quarter.

Retailers are taking notice of consumer pullback.

Target and Walmart recently announced price cuts across household staples in a bid to win market share as consumers increasingly seek deals to stretch their dollars.

“What’s interesting is [the price cuts are] likely to expand to the rest of retail, given Walmart and Target set the tone on pricing,” Joe Feldman, an analyst at Telsey Advisory Group, told the Financial Times, PYMNTS reported May 22.