Customers will spend extra in 2020 than in 2019, says the CEO of Financial institution of America
According to CEO Brian Moynihan, consumers are spending more on Bank of America accounts this year than they did in 2019 amid the coronavirus pandemic.
"If you look at what they've been spending since the start of the year, they spent more in 2020 than they did in 2019, and that's now more than $ 2.7 trillion being moved by our consumers," Moynihan told Wilfred Frost from CNBC gave a Wednesday interview.
Moynihan's comment is the latest indication that many Americans have surprising financial resilience despite record levels of infections and rising death tolls. At the start of the pandemic, US banks allocated tens of billions of dollars for loan losses, but the defaults have not yet occurred. This is partly due to unprecedented federal measures to stabilize markets and inject money for households and businesses.
"As early as May you could see it flattening out and starting to grow," Moynihan said of the spending data. "Now it has really grown every month since then. The month of November is up about 4% from last November, and the month of December is up double-digit so far."
Part of the increase in spending this month was due to transactions that normally take place during Thanksgiving week being postponed to December due to restrictions related to Covid, Moynihan said.
While restaurant spend was down 25% year over year, home improvement transactions offset declines elsewhere, he said.
Despite the positive signs, Moynihan said another round of incentives was needed to support the unemployed and small businesses. Legislators are negotiating a final attempt to approve an aid package before the end of the year.