The CEO of Bank of America (BofA) has weighed in on the recession debate, saying that it does not matter if the Biden administration believes the U.S. economy is technically in a recession or not when current economic conditions are hurting the most vulnerable households.
“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,” Brian Moynihan told The Associated Press.
Moynihan, who has been BofA’s CEO since 2010, stopped short of saying whether or not he personally believes the U.S. economy is currently in recession, pointing instead to the National Bureau of Economic Research (NBER), the organization that has the final say on whether recessions begin and end.
According to NBER, its traditional definition of a recession is “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
However, his comments come as the issue of whether or not the U.S. economy is in recession has become politicized in the lead-up to the 2022 mid-term elections, with the Biden administration continuously denying that the country is in an economic downturn despite data showing the economy shrank for a second consecutive quarter.
Following July’s 8.5 percent inflation rate reading, the president also declared “zero” inflation, which prompted outrage among Republican lawmakers, including Rep. Virginia Foxx (R-N.C.) who stated that the Biden administration “has a tortured relationship with math.”
Others, like Sen. Ted Cruz, (R-Texas), noted that gas prices are up 44 percent year-on-year, while electricity is up 15.2 percent from last year.
“Food is the most expensive since 1979,” Cruz said. “The Biden White House is living in a fairytale while Americans are living in a nightmare.”
Areas Of Concern—Soaring Gas, Rent
Moynihan said that gas prices and rent are the two biggest issues negatively impacting average Americans and are reasons to be concerned.
The national average price of gasoline is $3.943 as of Aug. 18, according to data from AAA; drastically lower than the $5 per gallon price it reached in June but still a far cry from the $3.183 average this time last year.
“Gas prices are coming back down, but rents are going up 10, 12, 15 percent. And rent can end up taking 40 percent of these households’ income,” Moynihan said.
According to July’s Consumer Price Index data, the cost of shelter also rose both annually and monthly, climbing 5.7 percent over the year and 0.6 percent over the month.
“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.
Despite concerns over soaring gas and rent prices, Moynihan said he still believes that the average American consumer is in good shape overall and will be able to withstand the current volatile economic climate.
“We see no deterioration in consumer behavior from the beginning of the year until now,” he said while noting that Americans who have a fixed-rate mortgage largely have managed to lock in low borrowing costs and that credit card balances, albeit still rising, are still lower as a percentage of household income.
The BofA CEO did note, however, that the amount of money Americans are saving has seen a slowdown which is said is likely due to increased costs for everything from food to energy.
Moynihan added that companies are still raising wages for workers too which he said are helping Americans to “deal with this.”
The Associated Press contributed to this report.
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