BofA CEO Says U.S. Consumer Spending Is Starting to Inch Up

(Bloomberg) -- Bank of America Corp. is starting to see consumer spending edge higher after plunging with the start of the coronavirus lockdown.

The nascent increase, which follows a 30% drop, is showing up as consumers buy more groceries, restaurant meals, clothing and gasoline, Chief Executive Officer Brian Moynihan said in an interview Friday on CNBC. U.S. aggregate spending averaged about $50 billion over the past four weeks, comparable to levels in the fall of 2017, he said.

“It’s starting to grow a little bit,” the CEO said. “You’re seeing the start of a little bit more spending in some areas, in some of the states that have opened up a little bit. So we’ll see where that leads us, because it’s still pretty early on.”

Moynihan also gave an update on the bank’s participation in the government’s Paycheck Protection Program run by the Small Business Administration.

“This has been a heck of a week in the history of the PPP,” he said. “The SBA’s working posture this week started off a little tough, but has improved dramatically.”

Bank of America now has more than 231,000 loan numbers from the SBA, a requirement before the loans can be funded. Over the next 48 hours, it expects to send out 180,000 promissory notes to businesses for a total of as much as $20 billion, according to Moynihan.

Customers will have to execute the documents, send them back to the bank, “and the money goes into their account relatively quickly,” he said. The Charlotte, North-Carolina based lender has about 10,000 people working around the clock on the small-business relief program, he said.

Here are other takeaways from the interview:

  • “We’ll continue to buy our stock back, because at the end of the day, that is capital that we’re generating that we don’t need to support the business,” Moynihan said. The nation’s eight biggest banks temporarily suspended share buybacks for the first and second quarters. “We have all the capital we need to serve the customers.”
  • The lender is also committed to paying dividends, he said.
  • The trend toward digital and remote work, which started before the pandemic, will reduce the need for physical space, he said. “We’ll have less real estate demand.”

©2020 Bloomberg L.P.

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