Bank of America Barclays 24th Annual Global Financial Services Conference

Thanks. I hope your kid does well on the ACTs.

We were thinking. Not like you can't afford it. Actually, we were talking earlier. Today or tomorrow is the anniversary of a momentous weekend 17 years ago, and Jay and I were talking about I closed the conference that year before the weekend that we never want to repeat. It's good that you're still here doing what you're doing.

In the end, one of the things we obviously watch is what our consumers do along all dimensions, how they spend money, what their paychecks look like coming in, how they are using the lines of credit or how their credit posture is. That goes in the small, medium-sized businesses second because in the end of the day, that is the lion's share of the U.S. economy is represented. If you look at the consumers in the month of August, they are up 4% of spending into the economy versus last August. Yes, gas drove part of that. Gas prices drove part of that. But the reality is that there was more spending on cruise bookings, more spending on restaurants both quick serve at a lower growth rate, but regular full-serve restaurants at a higher growth rate.

The consumer spending on a broad base out of home entertainment has been big. The movies have come back because they have had some good movies. The consumer is spending money, and if you look at their paychecks, you can see the paycheck and you can see the wage growth is 3% plus to 4%. We are seeing that in their paychecks. Then we look at their credit. The credit quality is as good as it has been in a long, long time. We are normalizing. They are normalized to levels that are equivalent to where pre-pandemic, where January 7, things were growing the same way. It is only getting back to that. That was like a 40-year low. We feel good about that. On the small, medium-size, the good news is they are using lines of credit a little bit more.

They think about all the issues that you read about in the paper every day. But the good news is credit quality is good in the commercial book that the small, medium-sized loan growth is solid. They are using their lines not all the way back to where they used them, but they are using their lines, which is good news. They seem to have a stable employee base, and that ends up in the broader economy as unemployment. We feel very good about the underlying U.S. economy. Our team, like your team, has mid 2s growth for the year and Federal Reserve rates, but it will not knock the economy off its movement.

We always watch to make sure that we watch the new claims for unemployment levels. We watch any delinquency movement. We watch any sort of stress in the consumer payment cycle where they seem to be storing money. The good news is the American consumer continues to spend. There is affordability in their mind, and you can see that year-over-year in September so far, spending on gas is up 15%-20% on the credit and debit card charges. That's about 5% or 6% of the total. It doesn't change the overall picture. Credit and debit cards are 25% of the overall movement of money I'm describing. It's impactful. That caused them. If you look, we just published a report today where you can see at the pump versus inside the store, at convenience stores, what's going on.

It seems like the consumer still spends money. On their mind is affordability. That will be the issue to reconcile as wage growth. Will wage growth catch up or will there be real wage growth?