STORY: The U.S. economy, driven by its consumers, is in "pretty good shape,” despite swirling fears of a recession brought on by higher interest rates.
That's according to Bank of America CEO Brian Moynihan, who spoke to Reuters on the sidelines of the World Economic Forum in Davos, Switzerland.
"So it (growth) is solid. And that consumer spending, it goes back to the question of why the U.S. in pretty good shape. It's a consumer led consumption economy. The consumers are spending, their wages are growing and frankly, there's still a lot of stimulus in accounts and there's more, you know, Social Security payments are going up at a high rate, things like that that are going to add more fuel that they can use to spend.""
Moynihan struck a cautiously optimistic note amid worries about a downturn.
He said the U.S. economy could enter into a mild recession later this year or next year, but that for the rest of the world, the bank is still predicting growth.
Wall Street's biggest banks have stockpiled more rainy-day funds to prepare for a possible downturn.
But the Bank of America chief executive said his firm's analysts see underlying strength:
"And the reason why we still feel they feel confident, and they're the economic experts, but even talking to CEOs, yes, they feel that earnings may be under pressure from margins, from demand and things like that, but underneath that, they're you know, they're making money and they're selling stuff and things are going on and they worry about all the, you know, external possibilities. But overall, this business plans are solid and they continue to perform, but they're being careful because with higher interest rates, that's more expensive. With higher interest rates, demand may change and so they're being careful.”
The World Economic Forum's annual meeting in Davos takes place this week. Two-thirds of private and public sector chief economists surveyed by the WEF expect a global recession this year.