Bank of America CEO states that U.S. consumers and businesses have become more cautious with their spending.

• Bank of America clients are purchasing less, according to CEO Brian Moynihan, whether it's for household items or software.
• Approximately $4 trillion in consumer spending has increased by 3.5% this year through card payments, checks, and ATM withdrawals, according to Moynihan.
• He stated that the growth rate had slowed down significantly from the nearly 10% increase seen in May 2023.

Due to increased inflation and interest rates, both U.S. consumers and businesses have become more cautious about spending this year, as stated by CEO Brian Moynihan.

Bank of America clients are purchasing less, including hard goods and software, according to Moynihan, who spoke at a financial conference in New York on Thursday.

This year, consumer spending has increased by approximately 3.5% to around $4 trillion, according to Moynihan. However, this growth rate is significantly lower than the nearly 10% increase seen in May 2023.

According to Moynihan, both consumers and businesses are expressing caution and slowing down their activities, which have a significant impact on the American economy.

The slowdown started last summer and is in line with the "very low growth" climate from 2016 to 2018, he stated.

Despite the Fed's rate increase a year ago, consumers and businesses continue to struggle with inflation and high borrowing costs. The Fed attempted to control inflation by raising its benchmark rate in March 2022, but there is a risk of causing a recession if the economy slows down too much.

While the stock market has reached new highs this year due to economists' belief that the Fed will successfully pull off its goal, consumers are still facing higher prices for goods and services, which has affected American companies such as McDonald's and discount retailers as Americans adjust their behavior.

According to Moynihan, food shoppers are visiting more store locations in search of deals, with one statistic showing that they are going to three grocery stores instead of two.

While growth in rent payments has slowed, the tepid increase in overall spending is being sustained by travel and entertainment, with insurance payments being the only thing that has not moderated, according to Moynihan.

"Moynihan emphasized the importance of keeping consumers engaged in the US economy, stating, "The consumer is a significant contributor to the economy, but their role is becoming increasingly uncertain due to various external factors.""

Small- and medium-sized businesses, as well as large corporations, are impacted by the economy, according to the CEO of the second-largest U.S. bank by assets, Bank of America.

Moynihan stated that business owners are expressing satisfaction with their overall business but are slowing down on hiring, purchasing equipment, and making software purchases.

According to the bank's economists, inflation will be controlled by the end of next year, and the Fed will start cutting interest rates later this year, Moynihan stated. The U.S. economy is expected to grow at approximately 2% this year, avoiding a recession, he added.