Bank of America CEO Warns Middle Class Feeling Economic Strain Amid Shutdown
Bank of America CEO Brian Moynihan cautioned today that while the American consumer remains resilient, the middle class is increasingly feeling the pressure of persistent inflation and the ongoing government shutdown, potentially slowing economic growth.
Speaking on national television, Moynihan shared research indicating a divergence in spending habits. “You’re still seeing growth among median income households, at up to… 75,000, 100,000. They’re still growing, but they’re growing at a slower rate than the higher-income households above that. So that shows you some of the pinch,” he said. Despite this, consumer spending remains relatively strong, with Bank of America data showing a 5 to 5.5% increase in spending from customer accounts in the last quarter. This continued spending is crucial as consumer spending accounts for a significant portion of the U.S. economy.
However, Moynihan expressed concern about the sustainability of this trend, particularly with the government shutdown continuing. “Now the big worry is, well, will that all hold as the shutdown and tariffs continue on? And that’s the question on everybody’s mind,” he stated. He explained that the shutdown itself creates economic drag, as necessary government approvals for various activities are delayed. For more information on economic indicators, see the Bureau of Economic Analysis.
The warning comes after the Bureau of Labor Statistics reported yesterday that the Consumer Price Index (CPI) rose 3% year-over-year in September, the highest reading since January. High inflation disproportionately impacts lower-income households, who spend a larger percentage of their income on essential goods. Understanding inflation and its effects is vital for policymakers and consumers alike. Moynihan indicated he hopes a resolution to the shutdown is reached soon to mitigate further economic slowdown.
