Bank Of America CEO Brian Moynihan Says Consumer Spending Continues To Slow Due To Higher Rates

Bank Of America Corp BAC shares got a boost on Tuesday as profits jumped 10%, but CEO Brian Moynihan warned that consumer spending is slowing.

What To Know: Bank of America reported third-quarter earnings of 90 cents per share as net income climbed 10% year-over-year to $7.8 billion. The company's revenue results increased 2.9% year-over-year to $25.32 billion.

Bank of America said it added clients and accounts across all business lines, and noted that it did so in a "healthy but slowing economy" as consumer spending has been decelerating.

Why It Matters: Moynihan put the spending slowdown in perspective Tuesday morning during an interview on CNBC's "Squawk On The Street" following the company's quarterly results.

See Also: Goldman Sachs Q3 Profit Falls 33% On Fintech Sale Impact, Trading, Investment Banking Remain Stagnant

Bank of America sees the consumer move $4 trillion-plus from their savings accounts in any given year to do things like, pay credit card balances, write checks, send money and spend cash, Moynihan said. 

From 2021 to 2022 that number grew close to 10%. In the early part of 2023, growth had slipped to around 9%, he said, adding that it's now down to 4% to 4.5%.

That growth rate is consistent with what the company experienced in the years leading up to the pandemic, during a low-growth low-inflation economy, but down significantly from where we were last year, Moynihan said. 

Spending has been cut in half this year, largely due to higher interest rates. Households are spending a little bit more than what they bring in, which shows the economy has slowed down. These trends also appear to be pretty sticky, he noted.

"This is real-time data as opposed to lagging data so we can see this every week and the first 13 days of October look a lot like September, which was sort of, 4%," Moynihan said. 

BAC Price Action: Bank of America shares were up 1.96% at $27.52 Tuesday afternoon, per Benzinga Pro.

Photo: Mike Mozart from Flickr.