The CEO of Bank of America, Brian Moynihan, unpacking the impact of automotive rates and the future of the economy to move forward on “the countdown of Claman”.
The CEO of Bank of America Brian Moynihan Weighing on the new automotive imports of President Donald Trump, how consumers react to administration prices and the expectations of the bank concerning interest rates.
The new measurement unveiled Wednesday by the president will put a 25% rate on passenger vehicles, light trucks and certain automotive parts imported in the United States
“I think the concept was not a surprise. It was in the countryside, we talked, but reality is coming now, and therefore people are starting to make adjustments and trying to understand what it means,” said Moynihan on Thursday on “Claman’s countdown”.
President Trump announces new car rates
Analysts from the Bank of America think that the new price will result in an increase in cars prices and the purchase of vehicles to slow down, he told the Liz Claman host, noting “This is what you see reflected on the market”.
The CEO of Bank of America, Brian Moynihan, appeared during a panel session on the second day of the World Economic Forum (WEF) in Davos, Switzerland, January 18, 2023. (Stefan Wermuth / Bloomberg via Getty Images / Getty Images)
“When they think about it more widely, it can add a quarter of inflation. This can slow down some growth in places like Japan because it exports more to the United States, but overall, these things are absorbed over time,” said Moynihan. “But until they are understood, no one really knows, and they are unprecedented waters in terms of quantities and different parts and things like that.”
The automotive rate is expected to come into force at the start of next week, marking the last withdrawal from the imports of other Trump countries since it took office in January.
On Wednesday, President Donald Trump at an event in the month in the history of women at the White House in Washington, DC. (Reuters / Carlos Barria / Reuters)
“If we get back time and talk about our team, given all the price dialogue and try to take it into account, our American bank research team … They have growth in the United States, a positive growth of 2%, one and a half in the first two districts and going to 2%, which is a fairly constructive point of view,” Moynihan told Claman.
He also said Bank of America does not see the Federal reserve This year’s reduction rates “because they think inflation has been sticky, will continue to be sticky”.
Inflation measured by the consumer price index showed a 0.2% increase from one month to another and a 2.8% jump from one year to the next in February.
Bank of America still sees its customers spending money on Tuesday, According to Moynihan.
“The money coming out of their accounts – not only on their credit and debit cards, which is just over 5%, but in total – is 5% in the place where it was March 24 to March from 255, then in the first quarter, it is a similar amount, which is a little faster than in the fourth quarter,” he reported.
“Thus, everything you hear about consumers ceases to spend, we don’t see it yet,” said Moynihan, noting that “augurs well” for the American economy and “gets rid” in the future.
According to data from the Bank of America credit card, food expenses have increased due to the price increase, he said. Restaurant and entertainment expenses were also positive.
The Bank of America logo is displayed on the side of a branch in San Francisco on January 20, 2010. (Justin Sullivan / Getty Images / Getty Images)
“Credit quality is good for consumers, privileged consumers in particular,” said Moynihan. “They have their mortgage loan enclosed at a very low rate, despite the higher rates and the difficulties that cause on the housing market. The cars are already a little under pressure because the car rates are higher, so this will only be added, and we will see that shake.”
This “really goes back” to “employment for the consumer, he said, noting that the current unemployment rate of the United States and the still relatively solid” wage growth call.
The Bureau of Labor Statistics has set the unemployment rate at 4.1% in February.
“It keeps them in good shape, and it will increase well while we work through this period of uncertainty when companies and others shake what it means and how they adapt to it,” he said.
The feeling of consumers posted a drop of almost 11% in February, according to the University of Michigan survey among consumers.
“The American consumer is interesting because they will say things and they will do things,” Moynihan told Claman. “And even if confidence was falling last month, they still passed this month. In the end, as long as they are employed and we pay them more and the turnover rates in companies are declining and the labor market is not as tight as it was, you know, two years or a year ago … It is a solid frame.”
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He said that prices and “problems concerning prices and uncertainty” are more in small and medium -sized enterprises and large companies.
“But if you look at our medium -sized small customers, the interesting thing is before the pandemic, they would borrow at a rate of around 40% of the credit line line, which means that they would use the line on average 40%. Now, they are around 3 or 4% behind,” said Moynihan.
He suggested that they try to make sure that “they really have something to spend” and that the prices “simply add another question”.
These customers “will be a little on the sidelines” until more clarification becomes available, said Moynihan.
