Bank of America's CEO doesn't see the US economy fully recovering until the end of 2021 — but says credit damage has been surprisingly light
- Bank of America CEO Brian Moynihan told Bloomberg Television Tuesday that while he doesn't see the US economy fully recovering until the end of next year, credit damage has not been as bad as expected.
- "These measures taken by Congress, by the administration and by the Fed have worked to offset the unfortunate aspects of very high unemployment — and so far, you're not seeing delinquencies and things rise," said Moynihan.
- He continued: "We expect to see charge-offs coming later on, as this thing goes on, but the reality is right now you're not seeing the type of credit damage that you'd expect to see with this amount of downdraft in activity."
- Read more on Business Insider.
Bank of America CEO said Tuesday that even though he doesn't expect the economy to fully recover from the coronavirus pandemic until the end of 2021, credit damage hasn't been as bad as expected due to US government stimulus.
"Each quarter from this quarter forward is increased economic activity," Moynihan told Bloomberg Television in an interview, adding that he expects the US economy to return to its size before the pandemic at the end of next year.
What remains to be seen over time is how much stimulus programs and policies from the US government continue to offset the toll of high unemployment, Moynihan said. So far, he's seen that stimulus in place has helped protect from the potential credit impact that could stem from the coronavirus pandemic.
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"These measures taken by Congress, by the administration and by the Fed have worked to offset the unfortunate aspects of very high unemployment -- and so far, you're not seeing delinquencies and things rise," said Moynihan.
He continued: "We expect to see charge-offs coming later on, as this thing goes on, but the reality is right now you're not seeing the type of credit damage that you'd expect to see with this amount of downdraft in activity."
There have also been signs that consumer spending is picking back up, especially in areas where state economies are reopening, he said. In China, there was a burst in activity when lockdowns were lifted that then subsided, according to Moynihan.
That's what he'll be watching for in the US, he said. He expects there will be a surge in spending as people are able to get out of the house, but the question is whether or not that will be sustained in larger purchases such as homes or cars.