To paraphrase Shakespeare “a recession — by any other name — still stinks” was the basic message from a big bank CEO.
“Recession is a word,” Bank of America CEO Brian Moynihan told The Associated Press. “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.”
While many Americans are struggling to afford rising energy, housing and food costs, President Joe Biden declared during August 10 remarks at the White House there was no inflation in the U.S.
“Today, we received news that our economy had zero percent inflation in the month of July,” President Biden said. “Zero percent.”
The Associated Press further reported:
The issue of whether the U.S. economy is in recession has become politicized heading into the 2022 mid-term elections. While inflation is at a level not seen since the early 1980s and U.S. consumer confidence is falling, other measures of the economy, such as the monthly jobs report, are still strong. In response to high consumer and wholesale prices, the Federal Reserve has been raising interest rates aggressively in hopes of taming inflation while not causing too much economic damage.
Moynihan, who has been BofA’s CEO since 2010, would not say the U.S. economy is in recession, saying that declaration will have to come from “a bunch of people in Cambridge, Massachusetts,” a reference the National Bureau of Economic Research, the nonpartisan organization that determines when recessions begin and end.
However, Moynihan cited two major issues negatively impacting average Americans — gas prices and rent — as reasons to be concerned. The national average for a gallon of gasoline ballooned to just over $5 in June before falling back below $4 last week. Moynihan appeared more concerned about the rising cost of rents, tend not to fluctuate like gas prices.
“Gas prices are coming back down, but rents are going up 10, 12, 15 percent. And rent can end up taking 40% of these households’ income,” Moynihan said. Rent accounts for about one-third of the government’s Consumer Price Index, which showed a year-over-year increase of 8.5% in July.
The average U.S. consumer entered this period of high inflation and economic turbulence in healthy financial shape. The U.S. government spent trillions of dollars to extend unemployment benefits and other forms of pandemic relief. In response, Americans were paying down debts faster than historic norms and had higher than normal levels of savings. Those economic programs largely ended last year.
Moynihan said companies are still raising wages as well, which is helping Americans cope. Bank of America itself has raised wages to help its 200,000-plus employees counter rising costs. The company gave raises to employees making less than $100,000 of as much as 7%, depending on longevity. That does not include the company’s typical merit raise cycle as well.
“(The raises) are helping people deal with this,” he said.
Really? Does a seven percent pay raise balance a 50% jump in gas prices, 30% hike in food prices or rent increases so high many are facing homelessness?
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