1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,000 --> 00:00:09,160 Speaker 2: It really does all come down to the consumer and 3 00:00:09,200 --> 00:00:10,399 Speaker 2: what the appetite there is. 4 00:00:10,520 --> 00:00:12,879 Speaker 1: We want to really focus on the US consumer. 5 00:00:13,160 --> 00:00:16,479 Speaker 2: Bank of America releasing its final Consumer Checkpoint report of 6 00:00:16,560 --> 00:00:20,160 Speaker 2: the year saying there were no signs of consumer resilience waiting. 7 00:00:20,160 --> 00:00:23,759 Speaker 2: In November, President of Retail Banking Holly O'Neal writing, spending 8 00:00:23,800 --> 00:00:28,160 Speaker 2: momentum carried across all income cohorts through the gap between higher, 9 00:00:28,720 --> 00:00:32,559 Speaker 2: middle and lower income household spending growth is narrowing. 10 00:00:32,600 --> 00:00:34,879 Speaker 1: Holly joins us Now, Holly, wonderful to see. Thank you 11 00:00:34,880 --> 00:00:36,640 Speaker 1: for big with us morning, Good morning. 12 00:00:37,120 --> 00:00:40,280 Speaker 2: How much power is there left in bank accounts, in 13 00:00:40,560 --> 00:00:43,080 Speaker 2: desire in some of the spending trends that you're seeing 14 00:00:43,120 --> 00:00:43,480 Speaker 2: right now. 15 00:00:43,479 --> 00:00:47,519 Speaker 3: Well, as you said, the consumer resilience is not waning. 16 00:00:47,640 --> 00:00:50,640 Speaker 3: So across all of the metrics that we look at, 17 00:00:50,720 --> 00:00:55,520 Speaker 3: they look really healthy and the dry powder is there. 18 00:00:55,560 --> 00:00:58,040 Speaker 3: So when you look at the money they have and 19 00:00:58,040 --> 00:01:01,720 Speaker 3: they're checking and savings accounts still significantly higher than it 20 00:01:01,840 --> 00:01:05,160 Speaker 3: was even pre pandemic. Now we've seen that come down, 21 00:01:05,360 --> 00:01:08,360 Speaker 3: but it's still higher, so they still have some cushion 22 00:01:08,400 --> 00:01:13,039 Speaker 3: in there across all income cohorts, high, middle, low, and 23 00:01:13,120 --> 00:01:17,080 Speaker 3: in particular the low income cohorts look even stronger when 24 00:01:17,120 --> 00:01:19,880 Speaker 3: you look at it on a percentage basis. So from 25 00:01:19,880 --> 00:01:24,400 Speaker 3: a liquidity perspective, they look strong. From a borrowing perspective, 26 00:01:24,440 --> 00:01:27,640 Speaker 3: they also look strong. So they're borrowing in and around 27 00:01:27,800 --> 00:01:31,480 Speaker 3: the same levels that they were pre pandemic when you 28 00:01:31,520 --> 00:01:34,320 Speaker 3: look at our credit card data, so that looks good. 29 00:01:34,360 --> 00:01:39,080 Speaker 3: They still have borrowing capacity. The credit environment from a 30 00:01:39,120 --> 00:01:44,080 Speaker 3: bank perspective is fairly normalized. So I think the resilience 31 00:01:44,120 --> 00:01:48,480 Speaker 3: of the consumer looks strong. And they're spending also looks good. 32 00:01:48,560 --> 00:01:51,120 Speaker 3: And we're obviously in the peak spending period of the year, 33 00:01:51,520 --> 00:01:55,640 Speaker 3: so their spending looks good. They're spending was up in November, 34 00:01:56,440 --> 00:01:59,720 Speaker 3: and that matches our data of our surveys that we 35 00:01:59,760 --> 00:02:02,760 Speaker 3: take pre holiday. What are you expecting to spend during 36 00:02:02,800 --> 00:02:03,400 Speaker 3: the holidays? 37 00:02:03,440 --> 00:02:05,840 Speaker 2: So the reason why I find this so interesting, first 38 00:02:05,840 --> 00:02:08,000 Speaker 2: of all, is because this has been what has driven 39 00:02:08,400 --> 00:02:11,359 Speaker 2: us exceptionalism is the envy of a lot of other countries, 40 00:02:11,440 --> 00:02:14,240 Speaker 2: but also runs counter to what we're hearing from the 41 00:02:14,240 --> 00:02:15,960 Speaker 2: guidance of certain retail companies. 42 00:02:16,000 --> 00:02:19,200 Speaker 1: In particular, how do you swear that well? 43 00:02:19,240 --> 00:02:21,840 Speaker 3: I think I think that the consumer. You do have 44 00:02:21,919 --> 00:02:26,240 Speaker 3: difference in sentiment versus actual behavior. So we look at 45 00:02:26,240 --> 00:02:29,960 Speaker 3: the actual behavior of the consumer. What are they spending, 46 00:02:30,120 --> 00:02:33,080 Speaker 3: what are they spending on? So, as I said, spending 47 00:02:33,320 --> 00:02:37,480 Speaker 3: is up holiday period, it's also up. They're expecting to 48 00:02:37,480 --> 00:02:42,560 Speaker 3: spend twenty one dollars this holiday period. That's up seven percent. 49 00:02:43,280 --> 00:02:47,920 Speaker 3: So you know, within that, we're seeing trades to more 50 00:02:47,960 --> 00:02:52,040 Speaker 3: discount stores. So they're looking to stretch their dollar a 51 00:02:52,120 --> 00:02:55,920 Speaker 3: little bit more, and they're seeing the benefit of some 52 00:02:56,400 --> 00:03:00,960 Speaker 3: lowering prices. So in gas as an example, So in gas, 53 00:03:01,000 --> 00:03:04,080 Speaker 3: we're saying a higher number of transactions, but the dollar 54 00:03:04,080 --> 00:03:06,280 Speaker 3: amount is lower because the prices have come down. So 55 00:03:06,320 --> 00:03:11,200 Speaker 3: they're making trades within their spending behavior and they're really 56 00:03:11,200 --> 00:03:12,720 Speaker 3: making their dollar go further. 57 00:03:13,240 --> 00:03:17,120 Speaker 4: How do you distinguish the sort of trading down whole scenario. 58 00:03:17,320 --> 00:03:20,200 Speaker 4: How do you say that's stretching the dollar versus this 59 00:03:20,240 --> 00:03:23,080 Speaker 4: is weakness and this is something that might show some cracks. 60 00:03:23,320 --> 00:03:27,080 Speaker 3: I think, in my opinion, it's the consumer making good 61 00:03:27,200 --> 00:03:31,400 Speaker 3: choices with the money they have to spend. They're very 62 00:03:31,400 --> 00:03:36,760 Speaker 3: informed because the overall spending number is higher year over year, 63 00:03:37,200 --> 00:03:40,160 Speaker 3: but then within that they're making trades and adjustments. At 64 00:03:40,200 --> 00:03:43,680 Speaker 3: the same time, their liquidity levels are still strong and 65 00:03:43,720 --> 00:03:47,320 Speaker 3: they still have borrowing capacity, So all of those things 66 00:03:47,400 --> 00:03:51,320 Speaker 3: working together, I think are showing a good, strong, resilient. 67 00:03:50,880 --> 00:03:54,560 Speaker 4: Consumer trend has also been this spend on services. Airlines 68 00:03:54,560 --> 00:03:58,120 Speaker 4: spending still robust, cruises still robust. Do you see that 69 00:03:58,120 --> 00:03:59,960 Speaker 4: continuing on or could we have any sort of rotate 70 00:04:00,360 --> 00:04:01,400 Speaker 4: back into good spending. 71 00:04:01,760 --> 00:04:04,880 Speaker 3: I think you could see that rotation. As you all know, 72 00:04:05,080 --> 00:04:08,320 Speaker 3: during the pandemic, people really up the ante on the 73 00:04:08,400 --> 00:04:12,080 Speaker 3: durable goods, the washers, the dryers. We still haven't seen 74 00:04:12,160 --> 00:04:15,600 Speaker 3: that come back because those have a long shelf life, 75 00:04:15,200 --> 00:04:17,800 Speaker 3: So I think as you see that mature, you could 76 00:04:17,839 --> 00:04:21,679 Speaker 3: see it shift back. But the spending patterns really remain 77 00:04:21,800 --> 00:04:28,040 Speaker 3: fairly consistent. Travel experiences, services, those are very strong. We 78 00:04:28,120 --> 00:04:31,480 Speaker 3: are seeing in this holiday spend we are seeing electronics 79 00:04:31,480 --> 00:04:35,480 Speaker 3: come back a little bit, so that's also, you know, 80 00:04:35,880 --> 00:04:37,800 Speaker 3: a beginning trend. 81 00:04:37,839 --> 00:04:39,920 Speaker 5: I would say, speaking of the holiday season, a lot 82 00:04:39,960 --> 00:04:41,840 Speaker 5: of retail analysts have come on and said they're really 83 00:04:41,880 --> 00:04:44,400 Speaker 5: folks in the fact that there's five less shopping days 84 00:04:44,680 --> 00:04:48,720 Speaker 5: because it's a shrunk basically holiday season between Thanksgiving and Christmas. 85 00:04:48,800 --> 00:04:50,120 Speaker 1: Do you see that having any. 86 00:04:49,920 --> 00:04:52,600 Speaker 5: Impact at all on consumers willing to spend. 87 00:04:53,240 --> 00:04:56,440 Speaker 3: Now, I think overall the consumer is going to spend 88 00:04:56,480 --> 00:04:59,599 Speaker 3: for the holidays. You know, it is a more truncated period. 89 00:04:59,600 --> 00:05:01,720 Speaker 3: But just for that when we when we look at 90 00:05:01,720 --> 00:05:05,599 Speaker 3: the behaviors, so for the two weeks around Thanksgiving, and 91 00:05:05,640 --> 00:05:07,520 Speaker 3: it was late this year, right, I think it's as 92 00:05:07,600 --> 00:05:10,880 Speaker 3: late as it can get. We did see that spend 93 00:05:10,880 --> 00:05:12,919 Speaker 3: go up, and so I think it's just going to 94 00:05:12,920 --> 00:05:14,200 Speaker 3: be a more truncated period. 95 00:05:14,400 --> 00:05:16,200 Speaker 5: What would you be looking for if you see any 96 00:05:16,240 --> 00:05:17,560 Speaker 5: cracks of this resilience. 97 00:05:18,760 --> 00:05:24,880 Speaker 3: I would look to their spending patterns first. Again, borrowing 98 00:05:25,000 --> 00:05:28,240 Speaker 3: we will always look at as a bank. But the 99 00:05:28,640 --> 00:05:32,960 Speaker 3: borrowing behaviors are still really strong. They're still paying credit 100 00:05:33,000 --> 00:05:35,599 Speaker 3: cards off at a pace that's faster than it was 101 00:05:35,640 --> 00:05:38,919 Speaker 3: pre pandemic. That's a really good sign. And then the 102 00:05:39,000 --> 00:05:42,400 Speaker 3: liquidity in their their checking and their savings accounts, and 103 00:05:42,800 --> 00:05:45,240 Speaker 3: you know, I think we've seen that really kind of 104 00:05:45,360 --> 00:05:48,080 Speaker 3: flatten a little bit, and as we get into twenty 105 00:05:48,120 --> 00:05:50,640 Speaker 3: twenty five, I would I would expect to see that 106 00:05:50,720 --> 00:05:51,719 Speaker 3: start to grow again. 107 00:05:52,040 --> 00:05:54,800 Speaker 1: I'm trying to build on what Amoru is talking about. 108 00:05:55,000 --> 00:05:57,520 Speaker 2: There seems to be a disconnect and please help us 109 00:05:57,560 --> 00:06:00,360 Speaker 2: with this, because on one hand, in this survey, you 110 00:06:00,440 --> 00:06:03,440 Speaker 2: talk about the gap between the wealthiest and lower income 111 00:06:03,480 --> 00:06:05,839 Speaker 2: cohorts narrowing actually marginally. 112 00:06:06,160 --> 00:06:09,080 Speaker 1: You talk about robust firepower. 113 00:06:08,440 --> 00:06:11,040 Speaker 2: In their bank accounts, You talk about ability and willingness 114 00:06:11,040 --> 00:06:13,679 Speaker 2: to borrow, and then you talk about looking to stretch 115 00:06:13,720 --> 00:06:14,200 Speaker 2: their dollar. 116 00:06:14,520 --> 00:06:16,640 Speaker 1: This kind of behavior that you typically. 117 00:06:16,200 --> 00:06:18,599 Speaker 2: See on the brink of something that does feel like, 118 00:06:18,880 --> 00:06:20,520 Speaker 2: to Danny's point, a weakening. 119 00:06:21,040 --> 00:06:23,240 Speaker 1: So what gives why aren't. 120 00:06:23,040 --> 00:06:27,880 Speaker 2: People spending more in a traditional and free willing way 121 00:06:28,279 --> 00:06:30,520 Speaker 2: when the data seems to suggest. 122 00:06:30,200 --> 00:06:31,480 Speaker 1: It'd be in a position to do so. 123 00:06:32,040 --> 00:06:34,720 Speaker 3: I think that we've seen a permanent shift in what 124 00:06:34,760 --> 00:06:39,080 Speaker 3: the consumer wants as a liquidity position in their account, right. 125 00:06:39,160 --> 00:06:42,039 Speaker 3: So I think they got used to that during the pandemic, 126 00:06:42,120 --> 00:06:45,560 Speaker 3: saying I have more cushion in my bank account and 127 00:06:46,080 --> 00:06:49,159 Speaker 3: I'm going to keep that there, and then they're making 128 00:06:49,200 --> 00:06:53,080 Speaker 3: the trades into lower cost goods to make sure they 129 00:06:53,480 --> 00:06:56,240 Speaker 3: keep that and maintain that level. So, you know, I 130 00:06:56,240 --> 00:06:59,360 Speaker 3: think that's one of the trends. But I think it's 131 00:06:59,400 --> 00:07:03,880 Speaker 3: the consumer who is very educated, very aware there are 132 00:07:03,880 --> 00:07:07,520 Speaker 3: deals everywhere. They're in social media. We know that thirty 133 00:07:07,560 --> 00:07:10,280 Speaker 3: percent of our clients are planning to buy in social 134 00:07:10,320 --> 00:07:13,880 Speaker 3: media this year, which is very interesting, and so I 135 00:07:13,920 --> 00:07:17,239 Speaker 3: think they're they're very aware and very informed and making choices. 136 00:07:17,680 --> 00:07:20,200 Speaker 4: Is that the same thing as price fatigue, because we've 137 00:07:20,200 --> 00:07:22,840 Speaker 4: heard that a lot among companies that you know, their margins, 138 00:07:22,840 --> 00:07:25,080 Speaker 4: they can't keep expanding it because there's fears that people 139 00:07:25,080 --> 00:07:28,000 Speaker 4: aren't willing to pay up. Is that the same different 140 00:07:28,000 --> 00:07:29,520 Speaker 4: side of the same coin. 141 00:07:29,280 --> 00:07:32,440 Speaker 3: I think it could be, yes, And I think you know, 142 00:07:32,520 --> 00:07:37,560 Speaker 3: it's consumers again making very informed choices and taking control 143 00:07:37,840 --> 00:07:40,320 Speaker 3: for themselves as to where they can spend their money, 144 00:07:40,360 --> 00:07:41,600 Speaker 3: where they can budget. 145 00:07:42,000 --> 00:07:44,200 Speaker 1: Hally O'Neal of Bank for America, thank you. This was 146 00:07:44,280 --> 00:07:47,320 Speaker 1: really really interesting, Holly O'Neil. They're with U.