With all the changes and the ever-growing US economy, we’ve seen a shift in money habits. Bank of America CEO Brian Moynihan notes the decrease in consumer and business spending in 2024 compared to 2023 last year.
CEO Calls It As It Is
Brian Moynihan, the CEO of Bank of America, said that consumers and entrepreneurs have become more cautious about spending. ATM machine withdrawals, card, and check spending have taken a downslope turn, only increasing by 3.5% this year to an estimated sum of $4 trillion, whereas, in 2023, it tripled by almost 10%.
Observations and Findings According to Moynihan
The financial conference in New York revealed many aspects of current events. Moynihan confirmed that consumers are “slowing things down.”
Customers Work Wisely With Their Monies
Instead of costly holidays and lavish treats, consumers are pinching back their pennies in exchange for living better while managing through the economic change.
The Reserve Rate Increase Negative Impact
The Reserve used a term and overnight repurchase agreement strategy in 2019 to ensure reserves remain available during economic downturns. This option might have been a good solution for the present time it took place, but the repercussions show. To date, more consumers and business owners still struggle with steep inflation. The effects are still felt in 2024.
Federal Reserve Bank Increases Percentages
The Federal Reserve Bank has increased rates in an attempt to keep the markets stable. The increased inflation or repayment strategy is to curb and slow down the recession.
Stocks Benefit
According to economists, the Federal Reserve Bank is on the correct path for handling the economy and finances through higher interest rates.
Negative Impact Felt by Consumers and Business Owners
While stocks might benefit from higher inflation, the same can’t be said for consumers and business owners. The rippling effect is seen as food and essentials are now more expensive across the country.
Higher Costs for General Goods and Services
Consumers and business owners struggle with the higher rates, which is felt whether purchasing assets or groceries. The consumer and the entrepreneur have begun changing spending habits to extend their dollars.
Consumers Shopping Methods Are Changing
Many consumers resort to shopping for deals on goods and services to save money. In former years, consumers might have shopped at one store, but now they could go to three different stores in search of those bargains.
Large and Small Enterprises Change Strategies
Brian Moynihan also commented that because of how shoppers behave and are more inclined to find a deal and save, enterprises should adapt. From large market chains to small discount stores, all are slowly adapting to the shift in customer behavior, which is vital for continued success.
Consumers Play an Important Role in the U.S Economy
Without the consumer, other companies could fail. Moynihan emphasized, “We’ve got to keep the consumer in the game in the U.S. economy because they’re such a big part of it.”
Business Owners Are Slow To Replace and Hire
From a business standpoint, Brian Moynihan and other bank CEOs have noticed that company owners are slower to make new hires or take new business loans to purchase new assets and equipment.
Inflation Won’t Last
Increased inflation is not a pleasant strategy, and it affects everyone. Still, the concept is to improve finances and spending, like a reset, if you will. Economists suggest that it could continue into 2025 before inflation costs decrease.
Interest Cuts Can Start at the End of 2024
While inflation is predicted to come down next year, there are also hopes that the rates will begin to stagger from the end of 2024. At the same time, the Bank of Aerica’s CEO also foresees a 2% economic growth while steering clear from a recession.
The Future Looks Promising
While it can take some time for the economy to go back to normal, avoiding a complete recession gives the U.S. economy a better chance to bounce back to a somewhat financial “normal.”
Closing Thoughts
If you’re a consumer or own a business, what steps are you taking to save your money during the rise of the economy?
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
