How can we tell that the “movers and shakers” in banking and finance in this country are, to put it mildly, spouting pure horse hockey?
One clue is when the same institutions say different things to different reporters on different days, in a most Clintonian display of taking a position based on the audience and not on anything like…say….reality.
For the best example of this we need look no further in the banking rogues’ gallery than the CEO of Bank Of America, Brian Moynihan, who claims that American consumers are wonderfully “resilient” despite weathering supply shocks, inflation, and a Federal Reserve hell-bent on killing their jobs despite the complete lack of visible effect their efforts have had on inflation.
The bank’s customers continue to spend freely, using their credit cards and other payment methods for 10% more transaction volumes in September and the first half of October than a year earlier, Moynihan said. While price inflation accounts for some of that, the number of transactions also rose 6%, he said.
Customers’ account balances remain higher than before the coronavirus pandemic struck in early 2020, Moynihan said, indicating they were in a good position to continue spending. That is especially true for those who had the smallest balances, which were about five times higher than before the pandemic, according to a Bank of America chart.
Finally, consumer credit remains pristine, with late-payment metrics still well below pre-2020 averages, Moynihan said, indicating that so far, customers had little difficulty keeping up with their debt.
“We’re just now seeing [a] gradual move off these lows in early stage delinquencies; late-stage delinquencies are still 40% below pre-pandemic,” Moynihan said.
People with high credit card balances who are suddenly thrown into the unemployment line are people who can no longer pay their credit card balances.
People who are using their credit cards willy nilly are people who suddenly stop buying anything when suddenly thrown into the unemployment line.
Calling such people “resilient consumers” is like calling a person who eats cheeseburgers and fries every night “healthy” a month before he drops dead of a heart attack because he had to stop to change a flat tire.
In Merriam-Webster, “resilient” means “capable of withstanding shock without permanent deformation or rupture”.
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Will The Real BofA Please Stand Up?
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How can we tell that the “movers and shakers” in banking and finance in this country are, to put it mildly, spouting pure horse hockey?
One clue is when the same institutions say different things to different reporters on different days, in a most Clintonian display of taking a position based on the audience and not on anything like…say….reality.
For the best example of this we need look no further in the banking rogues’ gallery than the CEO of Bank Of America, Brian Moynihan, who claims that American consumers are wonderfully “resilient” despite weathering supply shocks, inflation, and a Federal Reserve hell-bent on killing their jobs despite the complete lack of visible effect their efforts have had on inflation.
One has to wonder how “resilient” BofA customers will be if the bank’s prediction of 175,000 jobs being lost each and every month beginning early next year comes true.
People with high credit card balances who are suddenly thrown into the unemployment line are people who can no longer pay their credit card balances.
People who are using their credit cards willy nilly are people who suddenly stop buying anything when suddenly thrown into the unemployment line.
Calling such people “resilient consumers” is like calling a person who eats cheeseburgers and fries every night “healthy” a month before he drops dead of a heart attack because he had to stop to change a flat tire.
In Merriam-Webster, “resilient” means “capable of withstanding shock without permanent deformation or rupture”.
How can consumers whose real disposable income has been trending down since mid-2021 be “resilient” if staring an employment apocalypse squarely in the face?
That sort of resilience takes growing disposable income, and that is something American consumers right now do not have.