JOHN DICKERSON: We turn now to the state of our economy with Bank of America chairman and CEO Brian Moynihan. Good morning.
CHAIRMAN AND CEO OF BANK OF AMERICA BRIAN MOYNIHAN: Good morning, JOHN. How are you?
JOHN DICKERSON: I want to start- very well, thank you. I want to start with the question of cyber-attacks. There have been a whole recent number of them, and we've seen the way in which these ransomware attacks can affect the economy. How much time are you spending on this and has your approach to it become- have the stakes increased based on these new recent attacks?
MOYNIHAN: Well, the financial services industry, this has been an issue for many years, and so I- I spent time on it. But frankly, the good news is we have a great team and our spending a year has gone from maybe four or five hundred million dollars a year when I first became CEO a little over a decade ago to a billion dollars a year, 2,000 plus people work on it. We work in deep cooperation with the rest of the institutions in our industry. But there's more that can be done and there are suggestions and proposals that are coming out to do more sharing of information, cooperation, speed and- and things like that, which I think need to be looked at by the administration and Congress and pushed through in order to protect more people.
JOHN DICKERSON: Tell me a little bit about that. Speed in particular, seems to me to be crucial in one of these instances. What more needs to be done?
MOYNIHAN: We were able to create a group called the ARC. Now it was called FSARC before, but that's a group of many companies that- that are inside the- the tent, so to speak, sharing information with people with the right clearances. And that allows us to move quickly when one person is seeing something and share it with others. And I think that kind of cooperation is in the most critical industries, but needs to continue to be moved to more and more industries over time.
JOHN DICKERSON: Let's switch now to the health of the economy. The jobs report for May was good, but not great. What do you see? You have a special window in on- on people spending and their consumer habits and economic activity. What are you seeing from your vantage point?
MOYNIHAN: Well, a couple of key points about the economy. One is it's predicted to grow, the US economy, is predicted to grow at 7% this year and 5.5% next year by our team. If you think about that, the economy is now as big as it was pre-pandemic roughly, predicted to grow at two to three times the rate over the next couple of years. Our consumers have lots of money in their checking accounts. We think they spent about 65 or they have not spent about 65-70% of the last couple of rounds of stimulus. Loans are starting to pick up and there's plenty of borrowing capacity. Companies have unused lines. And the spending by our consumer, which is a trillion and four so far this year, is up 20% over '19 and obviously a lot over '20. And what that really tells you is that you're seeing a 10% growth rate, which is a faster growth rate on a bigger amount. So the US economy is really set to go with a couple of key risks. One is supply chain, dynamics that you, I'm sure, you've talked about in your show. And the other is people getting workers. And that bodes well for the unemployment figure, which is starting to drop. And we predict to get in the low to mid 4s by year end, which is a pretty strong recovery engineered by the work of the fiscal side, the monetary side and frankly, private industry.
JOHN DICKERSON: When you- focusing on that 20% over '19, as you mentioned, '19 was not a pandemic year. So the spending appears to be- one of the things that we saw during the pandemic is people were paying down their credit card, saving money. So do you attribute that 20% to essentially what some people call revenge spending or the sort of pent up consumer demand that was out there?
MOYNIHAN: I think a lot of it has to do with- and what you're seeing happen is really reopening across the board and- and so while, certain places because the infection rates were different and reopened faster, you've got a pretty universal application now. So even here in Massachusetts where I live, you're seeing people be able to move about. So you're seeing the spending move to domestic travel, spending is up dramatically. Car rentals, hotels for leisure travel, not business travel yet, that will probably be late this fall, is strong. Theme park bookings and things like that. Those are all very good signs. And by the way, it's shifting from buying food in the store to more people going to sit-down restaurants, even over quick-service restaurants. So you're seeing that natural behavior, which is I can go out, I can do things and I can sit down and eat dinner. Because, frankly, way back when I was first talking to MARGARET on this question, it's a war against a virus and America is starting to win through all the great vaccination work that's going on. We're starting to win the war and it's not over yet. We've got to be careful to get it done. But we're starting to win the war and that's allowing the economy to reopen and that's allowing the spending to take place.
JOHN DICKERSON: Let me ask you about small business. Bank of America is the largest lender to small business. More than 400,000 closed during the pandemic. What are you seeing on the small business front and what kinds of businesses are borrowing and starting to take risks again?
MOYNIHAN: Well, the- the good news is you're starting to see our in- our smallest businesses, which is companies up to five million in revenue, we're seeing the originations actually exceed what they were in 2019 for the month of May. They're a little bit up in April. They're basically flattish in March. So you're seeing it come on. And that's really the reopening in those economies. The businesses that are doing the best are the service side businesses like doctors, lawyers and things like that really recover quickly. But now we've seen the supply chain, the people supply in the industry, et cetera, growing faster. One of the things we got to work on is continue the supply chain. And I think that's- when we asked our small business, what's on your mind in the fall it was all about the pandemic. In the spring survey we do, which is millions of businesses we asked the question to, it's all about getting workers and getting their supplies so they have things to sell and manufacture to sell to their customers. And that's something that's straightening out but will take a little time.
JOHN DICKERSON: And do you worry about the backlog of people paying their mortgages? Those who couldn't during the pandemic, what happens when they lose government assistance? Will they be able to pay those mortgages?
MOYNIHAN: Well, the good news at Bank of America, it's really a thing of the past. At the high point, we had given customers, two million customers, the right not to pay. We're down to a fraction of that now and it's going through the system. So I think at the- even in all mortgages, you come down. So I think there's a little bit of the world has largely recovered, but there's- there's a pockets of things that just have to be dealt with. And I'm sure the companies will deal with them fairly.
JOHN DICKERSON: All right. We've run out of time. Thank you so much, Brian Moynihan, for being with us. And we'll be right back.
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