Brian Moynihan, CEO of Bank of America Corp., currently sees no recession as the US consumer remains healthy.
"But what will result is the defeated US consumer, and the underlying consumer is doing well and he's making more money, he's employed, and more importantly, they are spending more money."
Wall Street Chiefs 'remarks that aired on CNBC on Wednesday came from investors' concern for the health of the US economy, and the Trump administration is involved in a year-long struggle with China over its trade policy Controversy focused on import tariffs has increased the chances that a recession could soon hurt the domestic economy and increase financial market worries. However, Moynihan said that a reversal of the yield curve, which took place last Wednesday just between the closely watched returns for shorter and longer maturity bonds, does not necessarily mean that a recession is imminent.
US Treasury Return for 2 years
TMUBMUSD02Y, + 1.60%
traded briefly above the 10-year yield of Treasury Notes
TMUBMUSD10Y, + 0.44%
for the first time in over a decade, a condition that preceded the last seven recessions.
go and say, "Here it means recessions are coming," Moynihan told CNBC. However, the bank chief said that this time around, the recession could be impacted by a global market with negative interest rates of around $ 15 trillion.
Check out : After the yield curve reverses – this is how stock market performance has developed since 1978
"But if you actually think about it, there may be two reasons for it. If you move, this debate will continue ", he said.
"Which is partly the flight to quality. 80-90% of the world's income is available in the United States. So the money is going to fly here because you're going to give it to somebody – a thousand dollars – and they'll give you back less in 10 years? Or give someone your money – a thousand dollars – and he'll give you more back in 10 years? That's why there's a lot of debate about it, "said Bank of America CEO.
Moynihan said the debate over US economic development lies with the consumer.
"And so, by August 15, you saw in our customer base what American consumers spent with Bank of America: $ 2 trillion," he said.
"It's up 5.9% yoy in the same period, up 8.5% in [2017-18] and 5.9% in 2018-19, so think $ 120bn "More spending by our consumers this year over the previous year, which means that US consumers continue to spend and the US economy remains in good shape," Moynihan said.
According to the Bureau of Economic Analysis: Consumer spending accounts for 68% of US economic activity.
Moynihan's confident consumer view is also referred to as the Dow Jones Industrial Average
DJIA, + 1.08% ,
the S & P 500 Index
SPX, + 0.89%
and the Nasdaq Composite
COMP, + 0.98%
posted on Wednesday at least in part due to the positive results of retailer Target Corp.
TGT, + 19.16%
and Lowes Cos.
LOW, + 10.03% ,
This is considered as a further indication of consumer health.
Take a look at the 14-minute CNBC interview: