Bank of America CEO Brian Moynihan: Spending Is Up 3/19/25

0:00Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Brian Moynihan, head of Bank of America, with a word on the consumer. The consumer is saying I'm getting more pessimistic in some of the surveys and things like that. But if you actually look what they're doing day to day, they continue to spend, which means the economy ought to be holding up better than people think. What the head of the nation's second largest bank is seeing in the economy, the new administration, and the I word, inflation. It's sticky before the tariffs. The tariffs then add a nominal amount to it.

0:35They're not caught. The stickiness of inflation has been true. And in Vidya's day in the sun, what's in your cereal box? And the dramatic firing of two Democrats on the Federal Trade Commission. Our Eamon Javers reports from Washington. This is an administration that clearly is intending to test the absolute outer limits of presidential authority. They want to amass as much power as quickly as they can. It's Wednesday, March 19th, 2025. Squawk Pod begins right now. Stand Becky by in three, two, one. Cue it, please. Good morning, everybody. Welcome to Squawk Box right here on CNBC. We're live from the NASDAQ market site in Times Square.

1:18I'm Becky Quick along with Joe Kernan. Andrew is out today. Yesterday was a down day across the board. It was the first negative session for three, but you saw the S &P pull back by over 1%. So we're continuing to watch that. I think at this point it's about 8.7 percent below the all-time high for the S &P 500. It's not going to be a straight march back up. Still some volatility out there and a lot of questions about what comes next. I guess the question becomes, is this happening because of tariffs and uncertainty about what's happening in policy? Is this happening because of a potential slowdown when it comes to the consumer, when it comes to businesses?

1:54And that's what we're going to try and dig into a little more today. We've got Brian Moynihan, the head of the Bank of America, who will be joining us to say what they are seeing with their 70 million accounts across America. Get a little better idea of maybe what's happening on the ground right now in real time. An interesting time, because uncertainty can be self-fulfilling in terms of what you do, but it's almost like there's nothing really wrong right now with credit, credit spreads, delinquents. But it could be. There could be. But right now, we're just sort of in this weird holding. Yeah.

2:25Yeah, I think, and that, you know, psychological, the market's all about psychology, anyway. And you were going over the recent action in the markets. I'm good for a week, I think. You know how you did your pie thing the other day? How far did you go out? I think I could get it to 18, but I can't unless I'm going to get it done. 18, I can't do that. I know yesterday the market was down. Monday the market continued to go up. Friday we had a big day up, 650. Yeah. That was a rebound from a horrible day on Thursday and Wednesday. Now I'm done. Well, I think you can walk away and say, for the week we were down last week, we were up again Friday and Monday, though.

3:04But I'm good for about five days. Agree. And then it's like, okay, I'm starting a new week to watch. Then you fall to the, okay, how far are we from the all-time high, right? That's what we fall back on. That's what's most important. It is. Last year was the first year back that we did this live, And it was like a rock concert. And it was described, GTC was described as the Woodstock of AI. And this year, it's described as the Super Bowl of AI. NVIDIA announcing a slate of new chips and software for building and deploying artificial intelligence. The shares of the AI giant ended yesterday, trading down more than 3%.

3:44Company CEO Jensen Wong revealing what the company is calling the Blackwell Ultra, which will ship in the second half of the year. This is an update to NVIDIA's current flagship device called the Blackwell. It will feature more memory than the current model, helping it to support even larger AI models. Wong also revealed NVIDIA's next-generation chip called Vera Rubin. That must be someone very important in the, I don't know. I thought about that immediately. I knew it was Rubin. I didn't know it was Vera. Vera Rubin, yeah. Oh, an American astronomer. Yeah, we'll begin shipping in the second half of next year.

4:25You say Rubin was an American astronomer who helped further scientists' understanding of dark matter. In his signature black leather coat, Wong addressed attendees at NVIDIA's week-long GTC event. AI is going through an inflection point. It has become more useful because it's smarter. It can reason. It is more used. You can tell it's more used because whenever you go to chat GPT these days, it seems like you have to wait longer and longer and longer, which is a good thing. It says a lot of people are using it with great effect. Investors are also paying close attention to some key partnerships that NVIDIA announced.

5:07Wong said General Motors has selected his company to build its self-driving car fleet, and that led to a decline in the shares of autonomous driving company Mobileye. NVIDIA also announced AI collaborations with IBM, cybersecurity company CrowdStrike, and T-Mobile and Cisco. We'll also partner with Disney and Google on humanoid robot development. What is Disney doing in the humanoid robot? Who the hell knows? That's what I could figure out. I don't know. The lead story in the journal, the world will need 100 times more computing power for advanced AI than it considered necessary. As recently as one year ago, according to Jensen.

5:49And then I was hearing yesterday that for just one of the big power centers, or for one of the big compute centers that's being developed, they're going to need 400 million of these NVIDIA chips, which is where the demand comes from these things, if you continue to watch this. By the way, Vera Rubin proposed that for every visible star in the observable universe, there were nine other invisible masses. Masses of stars. So the power, the factor of 10 for everything that's out there. I think there's a, I don't know. It takes so long for light to get here because of how long ago the Big Bang was.

6:29But for a billion stars that we sort of can see, there's a billion other galaxies or something. There's just... It's important here's a who. Yes. General Mills shares falling. The packaged food company reported earnings of a dollar a share. Estimates were 96 cents. Revenue is$4.84 billion, slightly below the$4.96. It was analysts were looking for. And the company cut its annual sales forecast, citing the impact of macro uncertainty on consumers in the current quarter. It said its new guidance does not include the impact of any new tariff actions. So uncertainty causing delayed purchases of breakfast cereals.

7:17Does that make sense? No. I would wonder if there are fewer people buying breakfast cereals because they're looking for less carb solutions, more protein. Right. That's a lot of the new diets that push you towards protein. Do you know the small boxes of Froot Loops? How small? The teeny tiny ones? No. Just not the bigger one? Oh, not the family size, but the regular? $7? Wow. Doesn't that seem crazy? What a great business. They make just vats of those things. And just to put a couple of cupfuls in a cardboard box all for$7. How come the margins are only 1 %? Maybe there's some. Marshalls? Yeah.

7:57President Trump shaking up the Federal Trade Commission with a controversial pair of firings. Eamon Javers joins us right now with more on this. And this is really kicking up a bit of a storm. Eamon. Yeah, absolutely, Becky. President Trump attempted to fire the two Democratic commissioners at the Federal Trade Commission late Tuesday, setting up a likely Supreme Court battle over whether he has the authority to do that at an independent federal agency. Any ruling by the conservative Supreme Court here could have sweeping implications for Trump's authority over a host of other agencies, including potentially the FCC and the SEC.

8:31The showdown went public Tuesday afternoon when commissioners Alvaro Bedoya and Rebecca Kelly Slaughter released separate statements saying they'd been fired from the Consumer Protection Agency. Slaughter's statement said, in part, the administration clearly fears the accountability that opposition voices would provide if the president orders Chairman Ferguson to treat the most powerful corporations and their executives like those that flanked the president at his inauguration with kid gloves. In his statement, Bedoya called Trump's action corruption, plain and simple, and said, I'll see the president in court.

9:07But the new Republican chair of the FTC, Andrew Ferguson, released a statement of his own saying, I have no doubts about his constitutional authority to remove commissioners, which is necessary to ensure democratic accountability for our government. Now, a Supreme Court ruling back in 1935 upheld a law that allows FTC commissioners to be fired only for good cause, such as neglecting their duties. But now the question is whether this court will overturn that precedent and grant the president's sweeping new authorities. There's also the question of what Trump intends to do with this newfound power at the FTC if he gets it, guys.

9:46Back over to you. Eamon, this is a pretty clear test. It sounds like the Trump administration wants this to be taken up by the Supreme Court because, again, that ruling is fairly clear from 90 years ago that you can't do just this. It will be settled, I would guess, by the Supreme Court in this. And if it turns out that he gets overruled on it, I think it's going to raise a lot of questions about things he's already done to this point. Yeah. And, you know, courts are starting to push back on some of the things he's already done. A court reinstated a labor agency person that the president had fired earlier this year.

10:21So we'll see where this lands. But I think you're right. This is an administration that clearly is intending to test the absolute outer limits of presidential authority. They want to amass as much power as quickly as they can in these early days here. They clearly have a playbook for doing that. And this playbook includes going up to the Supreme Court with this precedent to see if they can get it overturned with this much more favorable court. You know, this isn't the New Deal era anymore. Right. So the question is, then, what does the president want to do with this authority if he's able to get it right?

10:52If he's able to control all of these independent agencies, remove all the Democrats from all these bipartisan commissions, what does that world look like? And then narrow it back down to the FTC. What's he trying to do there? We saw this debate, and you guys and I were talking about this just yesterday on your program. What does the president want to do here? Does he want to be a conservative populist who's skeptical of broad corporate authority? Or does he want to sweep in an era of massive corporate consolidation through the FTC in sort of a hands-off laissez-faire way? We don't know the answer to that right now.

11:27Andrew Ferguson, as you mentioned, the FTC commissioner chairman now defending what he was saying. But very recently on a Bloomberg podcast, Ferguson was saying that when he was in the minority, he thought it was very useful. He wrote over 400 dissenting opinions, challenging the rest of it. And he thought that bipartisanship was kind of the answer and that it was valuable to have these dissenting opinions that were put through, even if you couldn't control how the vote went. Yeah. And when we talked to him last week, he said that he acknowledges that the president of the United States is his boss and he's not entirely independent.

11:59So, you know, take that for what it's worth as well. Eamon, thank you. I have a assignment for viewers in this area. Here's the New York Post. The astronauts are there. I can't find it in the Daily Snooze. I can't find it anywhere. Now, it's on the cover of most of the other papers, but the name Elon Musk is not mentioned anywhere. It's all become political. It is in the journal. I don't know. It may be in the other one. I know. Yeah. You've got to go to A3. The New York Times has a picture. You've got to go to A21. Mark Twain, famous line. If you don't read the newspapers, you're uninformed. If you do read the newspapers, you're misinformed.

12:40Yes, I know that one well. Yeah, we live it. I know. Cheese will be next. Coming up on Squawk Pod, Bank of America CEO Brian Moynihan, an extended discussion on the Fed, inflation, and what consumers are buying. A lot on services, a lot on entertainment, but the spending levels continue to go up. Plus, Moynihan rebuts accusations that his big bank has given conservatives the boot. It's clearly not true because we have 70 million customers and we bank all different types, 100 ,000 plus religious organizations, etc., etc., etc. We bank oil and gas companies.

13:20This is Squawk Pod from CNBC, today with Joe Kernan and Becky Quick. Here's Becky. Bank of America is the nation's second largest bank. It serves one out of every two households in the United States, and that gives it pretty unique insight into the state of the consumer. Joining us right now in a CNBC exclusive interview is Brian Moynihan. He is the Bank of America's CEO. And Brian, thank you for being with us this morning. It's great to be here, Becky. Good to see you again. All right. Let's talk a little bit about what you're seeing. We've been talking for a while about what's happening with the market.

13:56Part of the concern maybe is changing policy coming out of the White House. But there have been real concerns about what's happening with the consumer, consumer confidence, some of the retailers and the airlines talking about how they're seeing some weakness, at least for the month of February they were, with the consumer. We wanted to hear from you because you have such a good feel for the pulse of the consumer, what you see happening out there. So, Becky, I had them go and pull the information just as the most recent date they could get. So they got it through Monday. And if you look year to date, our Bank of America consumers are putting 6 % more money into the economy than they did for the first two and a half months of last year.

14:38And that's a pickup from the fourth quarter last year, which ran 4%, 4.5%. So that money is going to different places. And you've referenced some clients who might be seeing different things. But a lot on services, a lot on entertainment. But the spending levels continue to go up. And so we're in this classic moment, which we've been in for various times, as you and I have talked to the last few years, where the consumer is saying, I'm getting more pessimistic in some of the surveys and things like that. But if you actually look what they're doing day to day, they continue to spend, which means the economy ought to be holding up better than people think.

15:10And so we'll see this play out. But right now, the consumer is spending at a faster rate now than they did in the fourth quarter, and a faster rate than they did last year. And that money is going out in the economy every day. And for a year, that amount of money going out of our accounts is$4.5 trillion. So it's not a small sample set. And it's going into all different places. Is your point, then, that the ones we've heard it from, the retailers, the airlines, I mean, they're just spending it on different things? Yeah, they're shifting to services, entertainment, eating outspent, relatively stable.

15:42They may not be buying as many airline tickets. That, you look at a debit and credit card data, you can see that. But at the end of the day, what I'm talking about is this quarter, a trillion and a half dollars will go out of our consumers' accounts and economy. It's going at 6 % more will go out this quarter than last year, round numbers. And that means it's solid. And I think that sets up what Candace Browning and Platt and her team see in the research, is they don't see a recession. But they continue to consider the tariff impact on GDP, and they'll keep reflecting that. But they don't see recession.

16:12They see inflation being sticky, and the Fed's going to hold rates, and we can talk about that. But that consumer led economy that the U.S. is, that that spending level. And this is what is going on, not what people project will go on. And there's great debate about that because a lot of people say this could happen or should happen or might happen. This is what they're doing so far this year. I guess the question becomes, is it a self-fulfilling prophecy once you start to see consumer weakness just in terms of consumer sentiment? that? Well, if you think about, you know, think of COVID and think of after COVID and think of different policies and different things going on, the stopping of the stimulus payments, you've seen the consumer confidence up and down.

16:50And I think the consumer is rightfully saying, wait, this inflate, you know, these things may cause me to have to pay more. So let me think about that. Rates are up and it affects car loan pricing. It affects mortgage pricing. And that has an impact. But on the other hand, the consumers have tremendous wealth built up in their homes, as you've been reporting, your team has been reporting. It's the highest it's ever been and growing. And the stock market has corrected, as you just referenced. But the reality is we're at where we are in September, and the consumer confidence in September was pretty strong.

17:21So this will sort out, and I think a lot of it has to do with the amount of changes going on with the new administration and trying to sort that out, both for the consumers and companies and small businesses. Let's talk very quickly about the Fed, that meeting coming later today. You just said that inflation has been very sticky. I think the market's trying to suss out whether the Fed would step in if we did see a dip in the economy or whether they'd be more likely to worry about inflation as we see it right now, not being completely back to their 2 % target and any potential inflation that could come from tariffs.

17:55Where do you think the Fed is going to be putting more of its focus? this? Well, so let's go back to what our the broad outlines. The Fed's going to reflect what they see in the stats and the data. They've been clear about that. If you look at what our team sees and what they project, they project the U.S. economy to slow down this year from, you know, a high 2 % growth rate to closer to 2%. And the tariffs, they think, are about a 40 basis point hit to growth, especially in the first part of the year as people adjust to them. And so right now they They have 2.5 % for the first two quarters of this year.

18:30My guess is as those tariffs become more real as we move to the April 2nd date, etc., they'll bring that down a bit and probably closer to 2 % for the year. And they have 2 % GDP growth for 26%. That's trend growth. That's what we've all been trying to get to. For 10 or 15 years after the financial crisis, we never saw that kind of GDP growth rate except in corrective periods, and we never saw inflation. And on the other hand, inflation is stickier largely because tariffs add to inflation. They believe that. But they think it's handleable and offset by deregulation and other things that businesses will like.

19:05And that will help profit margins be maintained and maybe not pass through everything to the customer. But once you get through the other period, it'll just out. But they're saying that adds to inflation. So that means the Fed's probably on hold for the rest of their forecast period, which is the rest of this year and the next year. Hey, Brian, I want to allay your fears. I'm going to talk about debanking, but not with you, because I can prove you never debanked me. So I can prove that you didn't have something against my kind. I don't know. I don't know what you did close my most convenient branch.

19:37But I'm not going to I won't talk to you about that. But, you know, it might be an issue. And Tim Scott, the senator, does think it could be an issue. Now, President Trump is suing Capital One, saying that they closed a bunch of accounts down after January 6th without any reason for the Trump organization. And it's been done in the past. It was actually, you remember Obama with Operation Chokepoint. And then Travis Hill, the FDIC chair, acting chair, released correspondence showing that Biden regulators sent letters, don't lend to crypto. Actually, explicit letters do not lend to the crypto industry.

20:17So it's been done and abused, but I don't think it's the banks. I think it's regulators for whoever, you know, has a certain axe to grind at the time. Do you oppose having some type of legislation that would prevent regulators from doing these arbitrary and capricious things to banks and ordering them around? Joe, you've laid out all the discussions in my discussions with Chair Scott. and others, there is an issue that we are being told we have to do X, and then people say, well, that's not right. And you're saying, but we are in the middle, and it's an inch-wide, mile-deep hole. The penalties, the fines, the amount of work we have to do for these orders, because they're based on things like reputational risk, and it's a zero-fault tolerance viewpoint, which is you could do millions and millions of reviews, and if the regulators found one, they would exact severe penalties.

21:11So I think the goal is to get the regulation fixed. And it's clearly not true because we have 70 million customers and we bank all different types, 100 ,000 plus religious organizations, et cetera, et cetera, et cetera. We bank oil and gas companies and all the stuff that people say you don't want to do. The reality is that the regulations, because they have things like reputational risk, which is viewed after the fact in retrospect, are very difficult for institutions to comply. So our industry has made it clear with the Senate Banking Committee and the House Banking Committee and the administration, if you change these rules, you will not have this vice you put the industry in.

21:48And by the way, then it's interpreted by different administrations differently. And on the crypto, I think Acting Chair Hill had it right. And we were given letters that said, this is an activity we're not sure is legal, stay out of it. And we did. And if they make it legal, we'll get back in. As I said, we'll be back in the stablecoin business probably and other things like that. And so will the whole industry. Brian, let's talk a little bit about animal spirits, because that was basically on every guest's lips, starting in January, maybe even earlier than that, on the idea that the Trump administration and its pro-business policies would unleash these animal spirits.

22:25It does seem like that has slowed down a little bit. Maybe that is because of concern about what's happening with the tariffs in other places. But what do you see from all the business leaders you talk to? Look, you know, the end of the day, the business community is very enthused about deregulation and getting regulation right. Whether it's the drug industry, whether it's the bank industry, whether it's all different industries, they know that they have to have fair regulation, which is based in congressional intent and people's intent, but not subject to reinterpretation by other people. And that's been a difficult thing.

22:58We've been swinging back and forth for years on regulation. So they're enthused with the idea of lowering the regulation. I think that would be good for America and also be competitive for America. And they're enthused about that. What they're trying to figure out now, and it creates a lot of debate, is that the offset to that is understanding how these tariffs will affect the trading patterns of the world, the delivery patterns of the world, the manufacturing patterns of the world, and getting that right. Because at the end of the day, this country is a big final market, as is Europe, where lots of goods are sold, as is Canada and Mexico are part of the supply chain and part of the final markets, and as is China.

23:35And everybody's trying to figure that out. That's causing people to say, wait a second, let me look at this. Now, the reality is that if you look at the underlying consumer activity we talked about, if you look at commercial activity, their draw rates on lines of credit indicate that they're still, still, because a draw for small, medium-sized business on audit credit has a higher interest rate than it did before the rates came up, they're looking at it saying, I got to really be sure that what I do happens. And you're seeing a little more draws now. That may be getting ahead of the tariffs. But the reality is, is the business is still a coiled spring ready to go when more certainty comes in.

24:11And I think all businesses try to plan one, three, five years out. And if you're not sure how all this is going to work, that's going to take time. But the administration has been clear that they've got to get through a rearrangement of the economy that they're after and they're trying to achieve. And I think as this plays out, you'll see businesses come back. You saw a big deal that you referenced earlier in the last couple of days. You'll see transactions take place, a lot of conversations. But that's just going to take a little bit of settling down for people to take off. So Brian, net net, you got what could be some deregulation in your industry that could be very good, obviously, for you.