NEW YORK — U.S. consumers and businesses are still in good financial shape despite high inflation and concerns about a looming recession, some of the nation’s top bankers told a conference in New York on Tuesday.
Brian Moynihan, chief executive officer of Bank of America Corp, the nation’s second-largest bank, said customers spent 10% more in August from a year earlier, and bank account balances are higher for many than they were pre-pandemic.
“The consumer and businesses are in good shape,” said William Rogers, chief executive officer of Truist Financial Corp . “And the commercial and corporate side, businesses have never been in better health. Companies’ balance sheets are all really strong.”
The U.S. Federal Reserve has said it will continue to raise rates as it tries to tame inflation, sparking fears the central bank could cause a recession.
U.S. banks stand to benefit from rising interest rates because they can earn more income from charging interest to customers. Still, if rate hikes do send the economy into recession, that could cut in to banks’ profits.
Low unemployment, a strong housing market and a revival of the entertainment industry in California reflect a solid economy there, said Kelly Coffey, CEO of City National Bank, a subsidiary of Royal Bank of Canada.
The combination of COVID-19 government stimulus and a strong job market are still buoying consumer finances, said René Jones, CEO of M&T Bank.
“When we look at our credit statistics,” such as delinquencies and charge-offs, they are “very much below where we were pre-pandemic and it’s going to take a long time to normalize back to where we were.” (Reporting by Lananh Nguyen and Saeed Azhar in New York Editing by Michelle Price and Matthew Lewis)