Consumers spend and pay despite high rates and recession threats, Bank of America report says
Bank of America's quarterly earnings report shows that if there is a recession, it has yet to reach the budgets of millions of Americans, whose spending remains resilient despite high prices and higher cost of credit.
If fears of a recession in the US economy keep the markets submerged in uncertainty, US consumers seem to find no reason to cool their spending.
At least that's what Bank of America's quarterly earnings report shows, showing consumers are spending and paying off loans despite high rates.
There are two signs that the Bank of America report shows that consumers are staying active: the growth of loans and deposits from customers of the second largest bank in the United States.
The reading that the bank's executives give to these results is that if there is an economic recession in the country or in the entire world, there are still millions of Americans who are still unaffected.
In this regard, the Financial Director of Bank of America, Alastair Borthwick, reiterated that the behavior of its retail customers shows that their ability and willingness to spend are in good shape.
“In general, consumers remain resilient and continue to spend at a high rate,” said the executive in a call with journalists to present the results of his report.
Borthwick added that one point to note is that consumers are paying their loans on time despite high rates, which have skyrocketed as a measure by the Federal Reserve (Fed) to cool consumption and control inflation.
Nothing is more contrary to this than the results of Bank of America show, where the signs of a cooling could hardly be noticeable in the only data that would warn that something is happening: the fall from 12% to 9% in the growth of the interest rate consumer spending.
“They are paying off their loan balances at high rates, with continued ability to borrow,” said Bank of America's chief financial officer.
Since last March, the Fed undertook a strategy to control inflation, which was 8.2% in September in its year-on-year comparison, through aggressive increases in its reference interest rate.
The goal is for consumer demand to cool down and cause a gradual decline in the inflation rate until it returns to the 2% target.
A positive performance for Bank of America
The quarterly report reported that the bank had profits of $7.1 billion , a figure that, although it is 8% lower than the same quarter of 2021, is a larger amount than analysts expected.
Other relevant data showed that consumer deposits increased by 1%, while spending on credit cards increased by 13% in the last quarter.
After releasing its report, Bank of America shares rose 6% in trading last Monday.