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Bank of America CEO Brian Moynihan said Tuesday that federal stimulus measures to insulate the U.S. economy from the coronavirus pandemic are beginning to work.
“The goods news is … you’re seeing consumer spending start to grow,” Moynihan told FOX Business’ Maria Bartiromo. “You’re starting to see these stimulus programs actually get deployed and in people’s pockets, and so they’re starting to spend.”
In March, consumer spending, which accounts for nearly two-thirds of U.S. gross domestic product, plunged to 7.5 percent, the biggest drop on record.
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A steep decline in spending dragged down GDP, the broadest measure of goods and services produced across the economy, at a seasonally adjusted annual rate of 4.8 percent in the first quarter of the year.
The severity of the coronavirus-induced downturn will be reflected more accurately in the second quarter, when the nation’s economy came to a near standstill to mitigate the spread of the virus.
So far, Congress has passed four massive stimulus packages to blunt the economic pain from the virus outbreak, including the $2.2 trillion CARES Act signed into law at the end of March, which established the Paycheck Protection Program, expanded unemployment benefits by $600 per week and sent one-time payments of up to $1,200 to Americans who earn less than $99,000.
At the end of April, President Trump signed into law a fourth aid package replenishing the small business rescue program with an additional $310 billion in funding, after the PPP exhausted its initial $349 billion within 14 days.
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During the second wave of aid, which began last Monday, Bank of America has so far been the top lender. The bank has distributed 275,000 loans worth about $25 billion, Moynihan said. Ninety-eight percent of those loans went to companies with fewer than 100 employees, and 75 percent went to companies with fewer than 10 employees.
“Those stimulus measures help bridge people to the other side of the river,” Moynihan said.
Still, Moynihan said the U.S. economy will likely not return to pre-crisis levels until the end of 2021.
“It’s starting to move in the right direction,” he said.