The US economy continues to perform well.

By many measures, retail spending was up notably around Black Friday.

Markets are at or near record levels and unemployment remains low.

And yet most Americans have long felt the economy is not doing well for them.

All of this is front and center as President elect Donald Trump is set to implement an agenda heavily focused on new tariffs, cutting regulations and extending tax cuts.

The Fed is also expected to cut rates again this month.

Decisions watched closely by businesses, investors and lenders.

Let's get some insight now from Brian Moynihan, the CEO of Bank of America.

He joins us now.

Thanks for being here.

It's great to be here.

So as we talk about the state of the economy, one key indicator is consumer spending.

And we have some fresh data on that front.

On Black Friday.

Americans spent nearly $11 billion online that shattered a record.

Travelers heading home after the Thanksgiving holiday set a record on Sunday.

Airport TSA screened more than 3 million people, so it suggests that Americans have disposable income.

What does that say to you about the overall strength and stability of the US economy?

So if you back up to the big picture, the US economy is driven by consumer activity.

Big final demand, largest economy in the world.

Consumer spend they earn well.

Our purchase power on a global basis is high.

So it's key that the US consumer stays in the game and spends.

And so from our data, black fives up probably high single digits, double digits the month of November all month is up 4%.

That's a good, healthy level, consistent with a strong consumer sentiment.

And the consumers expect to spend about 7 to 10% more in their survey this year than they did last year.

And so that being said, with inflation worries and prices being up, there's a lot of.

Wait a second.

I'm paying more for this than I did four years ago.

But but that's a natural human reaction to rapid price increases that occurred in the inflationary period of 21 and 22.

That is now more under control.

But still, people don't don't forget the past.

Is that how you reconcile those those widespread anecdotes with people struggling with higher prices?

I mean, that's what we heard in the lead up to the election.

That's what people seem to indicate with their vote.

That's how you explain that disconnect.

I think you explain that disconnect.

But I always I'm always a person say follow what they do, not what they say.

So surveys and all the work that we all do, you look in and say, you know, in the last week, including Thanksgiving, they spent 10% more than last year in that same week.

And I think they're feeling okay last year.

It's a record number and all the things you rattled off.

So if that's what they're doing, they can't be that worried.

Now what's happened is they shift around.

So gas prices have come down.

They've spent that elsewhere.

A little more on clothing and cosmetics and luxury goods in the purchases, more online and not online.

But that's a phenomenon.

But going on two years, that's not an unusual phenomenon.

So if you put that all together, the American consumer is healthy.

They're employed.

Unemployment's 4.1%.

The wage growth is still stronger, the inflation rate.

But they're still going to remember, I paid $3 for that and I'm paying $4 for that.

That doesn't sound right to me.

Meantime, the Fed is getting set to meet again.

They're going to consider cutting rates again.

What are you hoping to see in the way of more rate cuts into the next year and to what level?

Our research team, which is one of the best in the world, basically has a cut in December and then maybe 3 or 4 cuts next year.

That's come down, meaning less cuts because as a as the belief that the economy is strengthening and they've raised their estimates for GDP growth in the early part of next year, like 100 from 1.5% to 2.5% for annualized growth in a quarter.

That's a big movement up the United States 2% plus or minus one.

To get above that means we're growing faster than our trend.

So they believe those rate cuts will be slower, largely because inflation's under control and largely.

But the Fed's going to keep trying to make sure they keep inflation under control.

And as that strengthening economy comes.

That actually puts purchase power into the economy and inflation impacts.

So they've got to keep about what would be wholly different than anybody that entered the business world after the financial crisis after 2007 20 is we will probably see an end point of Fed funds rate in the 3.5% range, which is more what it was for a long time in history.

We just haven't had in a long time.

And that's could be wholly different for people to really think through the mortgage rate.

People see 6.5% separately.

my gosh, it's so high.

My first mortgage was 1,819%.

And I don't mean to sound like a curmudgeon, but that was the reality back then.

And so that rate in the absolute terms is high based on last 15 years.

But the absolute terms based on the last 40 years is much lower.

So the is bringing those rates down.

But the good news, if the rate structure stays a little higher, it means our economy is actually healthier.

One complicating factor on the horizon, President elect Donald Trump has made it clear he plans to implement significant tariffs.

Most economists agree that this tariff plan could could boost prices for consumers and make inflation worse, but they seem to disagree on how much.

How do you see it?

It really depends on what else happens.

Right now, they're saying if.

That tariff.

10% type of tariffs are talked about during election cycle is coupled with deregulation.

Other things.

Corporate profits will be relatively neutral and they'll feel okay about it.

And that means they may not pass for the price because the other day the tariff comes through and then a distributor of the bicycle or whatever it is, will decide whether to pass through that price or not.

They won't pass the price if there's other benefits and it's a competitive market out there, they will pass it through if there another benefit.

So our our team thinks it's balanced not by the impact of the inflating of the tariffs only.

It's balanced by the impact of other measures.

So the question will be everybody will focus on a tariff number because that sort of is identifiable.

The number.

The question is what's the package and how it works in sync?

And then the real question will be, will businesses pass through the tariff or eat it because they can get profit margins through lower financing costs, through growth, through other things.

And so it's a much more complex question.

Our people say it's relatively balanced in terms of how it'll affect business bottom lines, and then businesses will always be trying to make more revenue and that means more sales.

That means they'll use prices lever so try to work through, but near term it'll raise prices.

It's a question when they get offset.

We are hearing reports of companies shifting their spending and shipping plans in advance of what they fear might be another trade war.

I know Bank of America has relationships with 95% of the Fortune 1000 companies.

What are you hearing from from business leaders?

The reason people are careful is that we all learned something in pandemic about supply chain interruption.

So supply chain interruption because of tariffs where people sort of stop and aren't sure the demand, say quit shipping, you can't get stuff.

People quit making stuff because they don't think it's good to have demand factories slow down.

That whole mix is pretty powerful memory for people because in our day, think about surgical masks.

You had all the hospitals that were out of surgical masks and you're sitting to say, Wait a second, how can we get a surgical mask?

It's kind of and the reason is they're made in this sector of China was shut down because of the pandemic.

So they have to figure out how to make sure they have supply.

So what do they do?

They go out and grab all the supply they can, figuring that will then give them an extra 3 or 4 months if this thing gets into a battle and then mitigates.

So that's natural human behavior.

But shifting supply around, which is one of the questions about the goals of a tariff plan, would be to shift supply to other countries.

Vietnam, Indonesia, Mexico and other places.

In a second goal would be then to make sure we have adequate supply at all at any cost.

Because when I don't have anything to sell, I don't care what I'm doing, I can't make any revenue.

So I have to get a hold.

That's what you're seeing, some of the behavior.

This is all temporary.

In six months, this is all through the system and then have to adjust to the reality of a long term thing because you can't buy next year's Christmas supplies.

You don't know what you want to buy.

So it's really a temporary.

Yeah.

The president elect is also saying he's going to bring in Elon Musk and Vivek Ramaswamy to cut federal spending and to make government more efficient as they see it.

Do you have any concerns that indiscriminate budget cuts could affect economic growth?

You have to be careful in the broadest context because the federal government is another component of the economy.

So if you shrink it, the question has to be made up by the private sector that places the theory is it will be made up by other places because the end of the day it's debt financed, which is squeezing out other sort of financing.

You can make any place more efficient.

Every year we make our company command more efficient.

And when that when a team took over in 2010, our costs were in the 60, 60, 70 billion.

Here we are 2024 and we'll be in the mid 60 billion.

So think about that.

That was for efficiency and working digitization, automation, everything.

So I'm confident they can get there.

But you have to do it in a rational fashion that ensures it sticks to the ribs.

Otherwise you cut it, they'll come right back.

And that's the challenge for the government is can you get the cuts to stick to the ribs?

And that'll be an interesting dialog.

Other people have thought they could do this.

I mean, it's you know.

We better not try to do it.

Back in the 90s.

Ronald Reagan was going to do it.

Al Gore was going to do George W Bush was going to do it.

Barack Obama was going to every was going to make government more efficient.

Even in it's hard because there's complexities to it.

At the end of day, they're serving the American people.

It can be more efficient.

There's no question.

You have to do it carefully so you don't disrupt service.

And I would worry about the economic impact as much as I worry about.

We've got to make sure the core services operate, the you know, that the IRS runs properly.

The Bank of regulatory authorities were popular with the SEC runs properly because capital formation comes.

But on the other hand, I guarantee you with any company, any enterprise, this enterprise, there's always efficiencies you can get in if you go at the right way by eliminating the work to be automated, then you can get the efficiencies that stick.

Brian Moynihan, CEO of Bank of America, thanks so much for being here.

Pleasure to speak with you.

Thank you.