BofA sees consumers under pressure
Bank of America (BAC) is the latest big company to note the pain being felt by consumers hit by rising food and fuel prices. BofA exec Liam McGee told investors at a conference in New York that the bank has seen a “recent sharp increase” in spending on necessities by its credit-card customers, Bloomberg reports. The comment comes a week after giant retailer Wal-Mart (WMT) said the slowdown in the economy was observable through what it called “the paycheck cycle,” in which sales drop late in the month as workers run low on cash, and a day after JPMorgan Chase (JPM) chief Jamie Dimon said he believes a recession could be deeper than the 1990 and 2001 pullbacks.
BofA is also being hit by the housing bust, McGee said. He said the bank now expects to post losses above 2.5% of its home equity loan portfolio, up from a projection last month of a loss between 2% and 2.5%, Bloomberg reports. While McGee says the bank is “obviously not happy with rising credit losses,” The Wall Street Journal reports, it’s hoping to weather the storm by trying to attract more affluent consumers.
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