Moynihan, the leader of one of the largest financial institutions in the world, said regardless of the semantic games from The White House, the current economy is prompting a real financial hindrance on people.
“Recession is a word. Whether we are in a recession or not is really not the important thing. It’s what it feels like for the people going through this,” told The Associated Press at the Bank of America Tower in midtown Manhattan.
Politicians have bickered back and forth on whether or not the US is undergoing a recession ahead of the 2022 midterm elections. President Joe Biden claimed on July 28 that the US was not in a recession despite new data showing GDP had contracted for a second straight quarter — meeting the long-accepted definition of a recession.
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Meanwhile, Republican critics have said excess federal spending fueled the worst inflation since 1981, hitting an annual rate of 9.1% in June, causing consumer confidence to tumble despite strong monthly job reports.
In response to soaring inflation, the Federal Reserve has aggressively increased interest rates. More hikes are expected soon after officials found “little evidence” late last month that U.S. inflation pressures were relaxing.
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Moynihan would not say whether the US economy is in a recession or not, stating that it will have to be concluded by “a bunch of people in Cambridge, Massachusetts,” — referring to the National Bureau of Economic Research that determines when recessions officially begin and end.
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Moynihan said the two biggest factors affecting Americans today are gas prices and rent. Gas prices finally fell below a national average of $4 last week but had peaked at over $5 in June, according to AAA.
Moynihan, who’s been Bank of America’s top executive since 2010, was more focused on the rent costs, which don’t change like gas does.
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“Gas prices are coming back down, but rents are going up 10, 12, 15 percent. And rent can end up taking 40% of these households’ income,” Moynihan told AP.
Rent accounts for about one-third of the government’s Consumer Price Index, which showed a year-over-year increase of 8.5% in July, while gas prices continued to fall.
“We are worried about, for the U.S. broad-based consumer, is the increased rents as we go into the natural turn of rents (typically in the fall with school year),” he added.
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