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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amrie Hordern. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg
Terminal and the Bloomberg Business App. Joining us is the US Energy Secretary, Chris Right, Secretary Right, Good days you, sir, Good to see you.
Thanks for having you.
Get to skip the line when you come in, of course we do, missus Secretary, first time in Davos. What was your impression of the World Economic Forum.
Oh, it's fantastic to see leaders, political leaders, business leaders from all around the world gathering here for very candid dialogues.
I've enjoyed it very much.
There's a worry, and I'd love your reaction to this. A worry to the President's style. Yes, it generates results, but it's also turning off the Europeans. Did you feel that in your conversations with European pounders that they were offended by the last week.
I did engage in dialogues about that, and I think the rhetoric or the speculation was so over the top. It's going to be the end of NATO. The US military is going to invade Greenland. These were never on the table. The President since his arrival in office, has been how to strengthen NATO, how to get increased defense spending, how to get increased trade and cooperation between our countries.
So he's here to strengthen.
NATO, increase the security we have against the foes that are rising in the world. Yes, he has a different negotiating style and he gets different results. I just came from the peace in the Middle East event, like the conventional approaches don't deliver unconventional results. President Trump's about delivering results, and yeah, that's a different style.
The speech has been about self resilience, and that's been very much the tone coming.
Out of the White House, the idea that every.
Nation needs to look at what it has and really build that up. And that's one reason why the focus has been on oil. I just wonder do you feel like prices where they're at are supporting the US shail industry that usually operates at a higher price point. Do you think that this push to produce more oil is actually harming the US shail industry.
Well, First of all, though, president has one constituency, and that's the American consumer.
You know, businesses have to compete to be the best supplier to consumers.
But at the end of the day, the point of a free market isn't to help or protect businesses.
It's to serve consumers better.
And I remember ten years ago the shale company struggled because oil came down to eighty dollars and before it was one hundred dollars, and their profitability wasn't great. They've continued to innovate, continued to drive down breakdown prices.
US oil production is.
At a record high right now, as is natural gas production.
Do they have to.
Continue to innovate and drive down costs? Of course so, but that's what American business does.
At what point, though, does some of the oil, say from Venezuela, start to cannibalize from what the US is producing at home. Something that some people are worried about, whether it takes up space at refiners, or whether it just lowers prices in general at a time where they're already struggling to innovate fast enough to keep up.
With where prices are.
It's a challenge, but I would I would never underestimate the American oil and gas business or Americans across the sectors, so I don't worry so much about that.
And of course it's a.
Different kind of crude that comes out of Venezuela, and a lot of our refineries were built to refine this heavier, more viscous crude. We produce that light suite crude in the United States. It's a good combination. But when you have lower energy prices, you also have faster economic growth, which means faster demand growth.
There's always feedback effects.
Here.
We're going to see.
Faster not just US growth, but global growth because of lower global energy prices. One of my messages here in Davos talking to the European nations, the EU was a similar size economy to the United States.
In twenty ten.
They pivoted focused on climate change, for got what energy is used for, and they've had.
Very little economic growth.
We were both twenty five percent of global consumption just in twenty ten. Today the US is twenty eight percent and the EU nations are eighteen percent. That's the cost of expensive energy policies. And what we want to see is Europe reinvigorated. Europe to embrace lower energy prices, reindustrialize their economy and therefore be a stronger economic and military partner with the US.
Well, they outsourced their energy to Russia potentially, that's why we are seeing these exports out of the United States. When it comes to Venezuela, though, do you have planned to go down there, maybe even lead a delegation of oil executives.
I'll go down to venezuel and the relative in your future.
I'll get down in the next few weeks, all go down to meet with government officials and look at the existing oil facilities down there. We will definitely see a number of American oil and gas companies going down as well and investigating opportunities on the ground.
Who are going to be going down with I imagine you're on speed dial and have constant conversations with Mike Worth you over Chevron.
But is it Darren.
Woods potentially feeling a little bit better, He did call it uninvestible Venezuela when he met with the president recently.
Well, that's a backward looking comment, right, because of course for ten fifteen years it.
Has been uninvestable.
So this is about looking forward about where we're going and who are the early movers going to be in an environment that's better today than it was a month ago. But is it fully rule of law, democratic, thriving society again, of course not. This is a process only three weeks into it, so that you're going to see increased production out of Venezuela, first from the incumbent players like Chevron, and then from the new smaller, scrappier American independence that'll go.
Wildcatters are the ones that are reaching out to you.
Yes, across the board, bigger companies too, but the faster movers will be.
The wild and you plan on giving them these fresh licenses so if they do feel like they have the security concerns and it's good to go in Venezuela, that they could start.
Absolutely, they will start.
Yes, we will move o FAC approvals for anyone that wants to go down there. We're going to let the marketplace decide that I'm not going to choose or pick among companies but we're going to certainly open up that opportunities together with the interim.
Authorities in Venezuela.
Right now, we're going to open up the opportunities to grow oil.
Production in Venezuela. Now for America, good for Venezuela.
Not chosing them picking is an interesting one because we have seen the administration choose and pick certain companies to develop things.
Why is this a different moment?
Well, good look to do things short and quick, to immediately market the crude out of Venezuela and get money flowing as fast as possible.
You've got to make choices.
Then, so immediately, when you have an immediate objective, you've got to make decisions. But ultimately, we want capitalism in the marketplace to decide who the operators are, who the marketers of the crud are, and what the future of the industry is going to be in Venezuela.
What's the ultimate goal?
Is the ultimate goal to take share away from say the Middle Eastern Russia. Is the goal to lower prices below fifty dollars a barrel? What's the ultimate goal with the United States involvement in Venezuela's oil industry, Well.
The ultimate goal was to stabilize our hemisphere, to reduce the running of drugs and guns and criminality. Venezuela's basically become a big drug, big drug criminal organization with Hez Bowl as Western Hemisphere headquarters there, Russia, Iron Cuba. So the goal of Venezuela was geostrategic to have it as safe, peaceful, prosperous ally of the United States as it was for decades.
And as part of that, the tremendous resources Venezuela has in oil, for sure, that's going to be a large part of their economy growing and all that, and is more Western hemisphere oil production. Good for the United States and good for the Western hemisphere, sure, but it's good for the whole world.
Saraharra, do you think you can work with Delsea Rodriguez?
We are today, We absolutely are today.
You'll meet her when you go there.
I certainly will.
Because she was their oil minister. And Jonathan asked me this when Nicholas Madora was captured.
I used to cover opak. Does the United States basically have a seat at the table when it comes to the cartel?
The cartel in Opak, Yeah, because.
Basically you have this pragmatic approach to Delsea Rodriguez. You're bringing in the energy companies into Venezuela, and Venezuela is part of OPAK.
I hadn't even thought about that, But of course we're not looking for a seat at the table at OPAK. Of course, the United States produces more oil today than Saudi Arabia and Russia, the two biggest other producers of oil. So I think we're quite comfortable with where we sit. We just want a stable, prosperous Venezuela to be good for the United States, good for the Western Hemisphere, and good for Venezuela.
So that's tight.
The answer that Amory gave me when I asked that question to her, i'm Rey turned around and said, they already have one as Saudi Arabia. Yeah, and they can lean on the Saudi's to get what they want.
Is that fair? Do you have enough influence on accounts?
Homy? We don't lean on them to get what we want.
But unlike the Biden administration, of course, we've embraced the growing economies, the growing freedom in the Middle East. The goal is to have a peaceful, prosperous Middle East and not a conflict ridden you know, it's about bullets and shooting people and who hates each other.
We want to make it free and prosperous.
Well, do you remember the first term when they're or is that price war? Prices went to negative on WTI and the President picked up the phone, this was his first term at forty five, called President Putin and called the Crown Prince Muhammed bin Salman. That's why I always say the US has a seat at the table. The President does seem to want to work in the energy space.
He understands the criticality of energy and of course during COVID in emergency situations, you want a strong, resolute business focus leader.
Can I finish on security guarantees in Venezuela? I think it's importen. Can we offer security guarantees of these companies that aren't going to develop those reserves now?
We have no plans to do that.
The US involvement right now and controlling the flow of funds in Venezuela gives us huge leverage to reduce the criminality in that country, re establish peace and better business conditions in the short term. In the long run, you've got to go all the way to a representative government, a rewriting of laws and the constitution.
But that will take time.
But no, the activity we're doing is moving the security situation in a positive direction. But we are not going to get involved in providing on the ground security for people in Venezuela. Oil and gas companies operate all around the world in all different settings.
They're well versed in those challenges.
You understand why some companies might have reservations about coming in because that wonder what comes off to President Trump and whether the next administration will have that same commitment that you have to that country.
Of course, it's an evolving environment. This is not for everyone. There's always different risk and reward situations at time, which is why the wildcatters will move first. The bigger longer term you know, tens of billions in dollar investments. They're going to wait till there's more clarity in that environment. But fortunately with Chevron there, with Repsol there, with e and I there, with Shell right next door, we already have big incumbent players that are ready to grow their investments.
Stay with US, multile IMPEG. Savandan's coming up off to this. It's the lightest this morning. The President of the United States, Donald Trump canceling European tariffs that were sent to begin February first. After reaching a framework deal over Greenland. The US COMMAS secretary Howard Latnik joined us. Now making some waves of the World Economic Forum over the.
Last couple of days. Mister secretary is going.
To see you.
Great to see you.
Let's cut through the drama. Let's get to the big point in the elephant of the room. What happened at dinner time the other night. I've heard all kinds of stories booming, the guards storming at the room.
What happens?
Oh, this is so silly. So at the end of the evening they called on me. I just published an op ed in the Financial Times, and so they called on me. I gave two three minutes of my ft, which basically said that globalization right and the outsourcing of your industry to the lowest cost in the world right, had really left, had really harmed American, had harmed Europe, and it had failed, it had failed us, and that we need to reasure, need to take care of our own citizens.
So that's basically the model. And were I was.
Done with that two or three minutes, one person of the two hundred odd people in the room booed, and I felt honored because it was Al Gore on alcore Bood, and I was like.
Really, I wasn't throwing bread rolls at you from the bank. That wasn't happening.
Put it, I put it in the ft. I mean, I wasn't like trying to be quiet about it.
I mean I think that globalization, right, and the idea of global supply chains and finding the lowest cost, I mean, that is just not the way to take care of your auto workers, right who are in Ohio and Michigan. And so we're bringing that back. So think about this. When we were done with we started auto tariffs. We started working on it in March, and we finished in November, and we were done.
The last day.
When we finished, General Motives and Ford stocks each went up ten percent. General Motors ended the year of sixty percent. If I told you on January first that General Motives was going to be on sixty percent, you would all sit out stock And how about this? On that same day, Sean Fame, who runs the United Auto Workers, called me and said, I can't believe I'm calling a Republican Secretary of Commerce to say thank God for you and your administration.
The first administration is actually taking care of the auto workers of America.
So think about that.
You can, if you really think it through, you can take care of the company and the worker. You don't have to pick sides because we want union labor growth in America.
These are great jobs. Why wouldn't we want them in America.
So that's why Donald Trump wins the union vote, because he's actually pro these workers.
He literally is pro these workers.
It's not a political thing, it's these are great jobs for Americans.
Let's go get more of them.
There's a lot of money set to come into the United States and big bets, a ton of FDM. We could get into that in just a moment. I just want to stay on G seven, allies. This week's been quite a week. Emmanuel Macron, the French president, has said basically accusing the US of trying to subordinate the Europeans. The Prime Minister of Canada, I'm sure you heard his speech, Mark Candy other day, said this is not a transition,
it's a rupture. How would you describe relations with those countries at the moment.
I think our relations are perfectly fine, right. I described the relationship with respect to the whole when Greenland was going back and forth before we sort of settled it with a framework agreement, Right, I called it a kerf fluffle. Right. It's basically like if you have an argument with your spouse that's not real.
You know, it's not a real one. It's like a small thing.
My spouse doesn't go out there and deliver a speech after that argument.
It's the end of the relationship.
Fair enough, But you're right, and I think they overreacted. And it's proof that they overreacted because a day or two later, there's a framework that makes sense.
Right. What did we say? We said we.
Cared about it for national security. Right, we said we care about a national security. I mean, it's obvious we care about it for national security. Because if you're going to build a golden dome over the United States of America, right, wouldn't you prefer the golden dome cover Greenland? So when you're knocking out the missiles, you're not knocking them out right over your head like we've all seen Israel like knocking out the missiles right over their head with their iron dome.
Wouldn't you prefer to knock.
Out the missiles if you live on the East coast of the United States of America over Greenland, a couple of thousand miles away where there's no people, Right, Does that sound better? So this is sort of where we're thinking about it and how our national security team is thinking about its. Actually, the framework, well, the framework is a national security based framework that that's what the United States cares about. We care about our national security, we
care about the shipping lanes. So let's talk about the national security and shipping lanes and let's see if we can't figure out a framework to do that together. And I think that's what the President truthed about. He said, we're going to try to figure that out together because those were the key points that the United States of America cared about. And I think the President's been clear about it and he just wants people at the table
dealing with it swiftly. I mean to think about this, he sends out a truth and like within four days, right, we have a framework agreement Like that's by the way, it's a pretty effection.
And we had we had tariffs on tariffs.
Off they were as they were never on.
The threat of them are coming on for February First, what does this do now for the agreement you were and your team struck with Brussels because the legal implementation has now been put on hold.
Oh, I think it'll be put on unhold probably tomorrow. I mean, come on, That's why I said it's an overreaction. I mean, they know when the President says, this is what's going to happen.
I mean what provoked the president.
What provoked the President was that they sent military people to Greenland. I mean, they didn't send military people to Ukraine. Like, why are they sending military people to Greenland? You know, it was so it seemed like a provocation.
We spoke to the Finish leader and he suggested that was a miscommunication and he cleared that up pretty quickly. There's something I want to get into with you that I think is quite important. This, of course, is the end of the deal. We talk about it on the program all the time. The President anchors the story to the extreme and then gets a faithful deal for the unat of time. So I think that's well understood. Something happened though, in the last twelve months that I think
is really interesting. He tried the same thing with Canada and totally upended the election in Canada north of the border.
Polyeff was going to sail away with that.
The reason Mark Carney's here as Prime Minister is because the President took such an assertive stance on Canada. Now at the time, I was finding the humor in the conversation. Then the Canadians started lighting up the Bloomberg terminal sending messages. They were deeply offended, and we've seen that damage the economic relationship with Canada and the United States, and the risk camemists the Secretary, and I'd love your thoughts on it and your reaction, because I think this is really
important regard to Europeans. The points you're making about Europe and have made over the last week are valid points and they're actually well received by a lot of Europeans. But the style in which is being delivered at the moment, some of them are finally offensive. Do you think there's a risk here that we damage the economic relationship with the Europeans in the same way we do with the Canadians, and for that matter, derail the conservative movement in Europe that's well underway.
I don't. The fact is that you need to rethink. I think Europe is amazing and it's got extraordinary opportunity and a twenty trillion dollar economy. But think about this, if they had the right digital rules, meaning similar digital rules to the United States, we have six trillion dollars with of committed investment to build data centers in America
and we have a thirty trillion dollar economy. So if they had a twenty trillion dollar economy, you'd say, okay, if they had the same rules, they could get four trillion, or how about two trillion. You realized two trillion for their economy, right, would be ten points of GDP s right over three or four years. I mean, that would produce amazing growth. And let me sort of explain how that works. So we did a deal with Micron. Right, they're going to build two hundred billion dollars in America.
So on Friday last Friday, we did a ground breaking of their megafab, one hundred billion dollar fag fab. And where did they do it. They did it in upstate New York, Conserracuorves. Now, there hasn't been industrial building state New York in probably forty years, but if you think about it, it had a huge industrial base once upon a time, So what.
Does it have. It has power because it has the power infrastructure for that.
So what that does is it creates like this enormous uplift.
And I think Europe can do the same thing.
I think the UK can do the same thing, and Canada is just thinking in this arrogant kind of thought.
Well, but just to build on what John is talking about, it's a style question. Can you get the same results without using words like calling leaders week or their economy is decaying?
Right?
Is it necessary to provoke the visceral feeling that we feel among a lot of leaders here and in conversations with international investors. I mean, is there any other way? Is that style more harmful than it is helpful?
Well, I think it creates listening, Like people pay attention to it and listen to it.
If you just sort of.
Blend in, no one hears anything in Davos, right, everybody says the same blah blah blah blah blah. And if you need to break out and you need to say it. So my view is right that Canada has never expressed to the world that they have the best deal, the second best deal in the world, the best deal in the world is Mexico, because remember they have USMCA, which means eighty five percent of the Canadian economy comes into
the United States for zero. And there he is complaining that he's going to go to China and improve it. What's he going to do? China's delighted to sell to him. But you think China's going to open their economy to accept exports from Canada.
This is the silliest thing I've ever seen.
They have the second best deal because Mexico's got a little better deal. They have twenty five percent on the extra fifteen percent, whereas Canada's got thirty five percent on the extra fifteen percent. But give me a break. They have the second best deal in the world. And all I got to do is listen to this guy wind and complain.
Mister Secretary.
In fairness, you've seen from the airplanes, you've seen about a thirty percent decline in Canadian visitors to the United States, if not significantly more. You've seen a similar type of decline from China. European traveler inbound have come down. There is a sense that people do not want to come to the culture of the US, and there is this anchor about it. I just wonder if you think that that's just temporary, or you just sort of dismiss that, or you think it's irrelevant to the actual issues.
I think what that is is political marketing. Right, the Canadians have the second best deal in the whole wide world if they continue this path, right, which is a political path of a certain thing.
I'm going to go fly to China. I'm going to open up my markets to China.
I'm going to take Chinese electric cars and do all sorts of this stuff. Then when USMCA gets renegotiated this year, this year sort of like towards the end of the summer, in the middle of the summer, do you think the President of United States is going to say you should keep having the second best deal in the world. I mean, you guys are such great friends. I mean they are playing with except of rules that they haven't really thought.
I can hear it in your voice. You're excited about negotiating this this year.
Well, they've sort of given a sort of a roadmap of saying, so, I guess we should change the whole deal.
Right, you want to be like the rest of the world.
You don't want to be this favored neighbor, because you've taken it so for granted that you're willing to come to Davos and say, the two higemic.
Powers in the world, and we're going to decide which one we're going to work with. Really, you're going to either work with the United States of America, where seventy five percent of your economy is totally tied to it, or China.
Why would you say that? It just I think it's political, you know.
I think if we take it correctly, we should look at it as just political noise coming out of a prime minister and maybe this is working for his election, right, because I don't think it can be real, because if you took out the math of Canada's economy and doing business with the United States of America's thirty trillion dollar economy, there's no such thing as changing what they have today.
No one would vote for changing what they had today.
Now, not thally they're marketing as well, but they're just for their politics, but they're surely not marketing it well for their fundamental economics.
For long term, the United States, the.
US is doing deals with China, and I'd love you to walk us through what's going on with the Age twenties.
Is it accurate now that basically for China to get the age twenty chips, Taiwan needs to send them to America for US to put a tariff on them to make money off it, and then send to China. And is it your understanding that China might be suspectable now to these chips? Suspect because they're entering through the United States.
So it's the Age two hundred, right, So that's the chip we're talking about.
And Jensen Wang came to the Oval office and he argued.
That this is a better chip than they can actually make in any scale, right, So if we sell them to China, right, and Chinese businesses, then they'll start using them and they'll develop on the American tech stack and that will take some money away from the Chinese tech stack. And that's an interesting argument. There are two sides. There are strong two sides. We shouldn't sell them any or we should sell them, which to us and I stayed
right in the middle. It was a really really good discussion, okay. And the President decided that fine, we'll sell the h two hundreds to them, okay. And he made that decision and after he was done, he said, and you know what, I think if we do that, we should get twenty five percent for the American taxpayers, right, because we're creating.
Something I think China wants to buy them knowing that they're going from Taiwan now back to the US.
They're coming to the United States.
Because in order to collect twenty five percent, right, the process matter to do it right is he imported, put a tariff on it, and then export it again. Okay, And so that's the model. It's the process model to execute a plan that the President United States of America made, right. So that's just the execution model of how to do it. It's not it's just process right. And it's the same age two hundred chip. And the question we'll find out is that businesses in China want to buy, that's for sure.
The question is does China Central governm right want you know when they have that same argument too, I want to give my companies this chip that they're all clamoring for, or do I want to force them to take the pain of using lesser chips that are domestically made but helping our domestic companies grow.
And that's a question we're going to see how it goes.
But I think the President put that question out there, and I think it's a really interesting one. I didn't say there's not two sides of that coin, right, but the President thought having Chinese developers on the US tech stack, right, given sort of the middle, he falls that way. And it was really robust discussion. Both sides of the discussion were in the room. It was a deep and thoughtful discussion. And that's where he came out, and that's why he's the president.
So, you know, just a final thought, just listening to this engaging conversation of the last fifteen minutes or so, do you fancy the FED seat over the Federal Reserve? I can see comma section the extra. You can see him in the equoes. Can you imagine the magic of that news conference? These news conference, the news confer I'd be going, you know what I call that?
I called that an Amy winehouse. No, no, no, I call that box office.
It's good to see you. Stay with us. More Bloomberg surveillance coming up after this. Let's stick with the economy.
The positive outlook joining us now is the Bank of American chairman and see Brian Moynahan Brian, good to see you.
Good to see you.
Howard and I were on a panel yesterday and then yesterday. Yeah, there made a day before yesterday and lunch to day and actually we're going to do another public venue where we're talking about how you raise the money to do all this investment he was talking about, so he's he's bullish on America. And he watched part of the interview. It sounds like you said that you guys are too. Yes, So let's start the GDP forecast.
Our research.
Our research turn is one of the best in the world, led by a woman named Cannons Browning Platt, and they all come out. They raised their GDP for US to two point eight percent growth for the twenty six right before we came to Davos, the world about three and a half they raised a point one And the important things I think to think about the US as you think about the travel last time from the last time you're here, last time you're here, we probably had two
and a half percent four twenty six. Then Liberation Day it drops all the way to one and a half. And then as a settling in of there's the four primary policies of the Trump administration, trade and tariff, tax, immigration and deregulation, starts settling in. We've raised it back to two six and out two point eight and that's so that's polish. And then underneath it we see what
the consumer really does. And if we can talk about that, you know, the consumer spending was strong than the fourth quarter when I've talked about that, it's four and a half trillion dollars our seventy million consumers which were blessed to have put into the economy a year, and that for the fourth quarter, that grew about five percent of twenty four's fourth quarter, and so far in January it's growing a little faster that you've got to be careful about.
Two weeks don't make a quarter. But let's staying up.
They're strong.
Well, let's pair that GDP forecast with the bank and the business lines. Then what position are you going to take advantage of that better growth story in America?
And what do you expected to show up?
Well?
Because who you are, and you know, we've been part owners of this company a long long time ago, and Mike has built a good thing around the market's business. That's whi you're always interested even though there's all this other stuff that makes a lot of money. But look if you look at Jim DeMar's now Copra as in the company, but his team and markets this year had their last quarter, had their fifteenh consecutive quarter of year over year growth. They just keep walking up ten percent
up for the fourth quarter. If you look at investment banking, which is kind of interesting, Sir Matthew Coder and a team. You know, early in December, we thought we were about a billion and a half and I went out at a conference and told people that in Lo and Behore we ended a billion six five and that made twenty twenty Five's the second best year of investment banking fees in our company's history, in the one that was pandemic
when everybody did a lot of financing. And next year we think we're bullish because of pipeline and then broadening out of the revenue stream into the IPO markets and other things which are got to start a little bit this year but have been pretty depressed for a while. So that's coming in. And deals either just the deal flow.
People can get deals done. When I was here a couple of davas ago, you know, the regulatory burdens were getting so high that you couldn't honestly tell a client who's trying to do a five billion dollar deal to do it, because you said, if you can stabilize your company for six months a year trying to get this through, and you don't get it through, is.
That worth it?
And that's sort off the table, and even our industry, even though we can't do anything six months, approval of timelines are back to where they should be.
It seems like there is an incredible amount of foolishness here at Davos about deals, about IPOs, about all sorts of transactions, and some of the issuances of debt and equity.
At the same.
Time, there's a real concern about affordability. There's a concern about how well the consumer is going to be able to face off with inflation. I'm just wondering if this is the year that we see the two come together, because last year they didn't come together. We saw the same kind of joblessness in terms of the growth, and we saw the same kind of lack of enthusiasm and sentiment surveys.
Yeah, so if you look through the if you think about last year and think about how bullish people were last year because about the United States and the change of regatory regime and things like that. You know, in April things change and then by the end of the year it's changed back, and so I think that had a lot to do with it. If you look at the consumer and what we see, that spending level is not consistent with people who feel they're threatened in the future,
and they're spending on all kinds of things. Now, if you look at the research team the Bank of America Institute, if you look at the work they've done, if you put three groups of customers lower income, third, middle and come third, upper and con third, they're all growing at the middle and upper growing a faster rate, and frankly
that drives a lot of the growth. But if you look at what everybody's spending on, they're spending on going out thet they're spending on booking vacations, are spending on essential So what's the affordability. It's the inflation that people remember, and that is going to take a while for people to kind of put in the rearview mirror, because people can remember it's not too hard to remember pre COVID,
where X was costure. You know, got email customers a gata gas cost you that your rent was this, And with that explosion of prices, wages also went up. But the consumer thinks more about the price side and then the question of we'll turn over and get back and sink And that's what's in those surveys. But if you watch your activity, and I'm a big believer, they'll tell
you one thing. Watch what they do, and that's what they're doing as of last Friday in the consumer base across seventy million people, which are pretty good sample.
Size, they're spending a lot.
Maybe they would spend even more if there was a ten percent cap on credit card rates. I mean, look at this proposal, got a lot of attention about a week ago. It feels like three years ago, and people push back and said it wasn't realistic, it wasn't feasible. We had Jamie Diving come out and discuss about how try it and see what happens.
What's your take on that?
How realistic are you seeing those proposals as being?
So if you step back, you know we're all for affordability and financial products. So you guys have thought over the year, is what we did on overdraft fees taking down by ninety percent over a course of fifteen years. What we did on having a five hundred dollar loan account of five dollars no interest rate, you could borrow
emergency loan of five hundred dollars. Eight million customers have used that over the last several years to give you a cent So and then we have a no frills credit card, no rewards and other stuff that people might attribute that is low rate.
It's not all way down at that rate. So I think the.
Question is can we figure out a solution where you can avoid the equal and opposite reaction? As our friend Lafayette said in the Hamilton song, you know every action has econdoptics reaction, So the equal opposite reaction we all talked about last week. If you actually make this a policy, you can reallocate credit. That will slow down spending, It will slow down credit availability, and that might not be
what you're trying to achieve. So can you do something on a go for a basis on the limited things, and even one year if you had to go reshuffle the whole deck, that would be pretty pretty interesting and to cause a lot.
Of change in people's views. Of what they have available for credit. You want people to have available for credit because that gives them the courage to spend it.
And so we're trying to figure out that.
We're all working trying to figure out.
Okay, given the affordability, given the thought process, is a way that we can do something that might help without having an equal and opposite reaction, because that would.
Not be good.
Our point is to get the credit losses down to the point you can afford that rate. You actually can never have a charge off, and you start to think about.
Who can get credit. That's thing. So we're working hard.
We're trying to cook with solutions like we are on some of the for the proposal around mortgage and form and K usage and trying to think of how you maybe can move the transfer wealth faster by giving people in my age bracket the ability to move a fourumn K bounce to pay help their kid buy a house or something like that.
We threw that out to Howard yesterday.
There's these ideas of letting people use their own form and K with less they can borrow from today. But there's a way you can actually just take with a draw so they don't have the added debt burden, and then you've got to work on the supply side of housing. And the President was interesting, Yes, he sense the issue. If you bring down house prices to make it affordable,
is that the right answer for everybody? But on the other hand, when you have the kind of over demand in some of the cities, who work in thirty thousand UITs in Charlotte twenty thousand, Bostony forty thousand, one hundred thousand, whatever in New York, you could build a lot before I think you'd have.
A major impact on the downward train of prices.
Well, the DJT imposed deadline of January twenty has come and gone for the credit card caps. Have you spoken to the administration about this issue and talk to them about the potential counterintuitive problem with a ten percent cap?
The team and I talked administration all the time about these policies and stuff, and they listen and they're trying to figure out the same issue from their side, how can they make America more affordable? And I think the number one thing we can do to make America more affordable is.
Keep everybody employed.
And Ernie's growth in our in our client base across seventy million people. We see a lot of paychecks come in and that's growing at three percent four percent, and that's a good number, and so know that wage growth continuity will ultimately make people feel different about it. It's completely understandable why they feel the sort of animus of how these things came into their household and then what they want to do about it, and then rent and affordability.
We've given them the types of ideas I talked about.
We need to see some bit of hiring as well. Can we talk about hiring the AI story. It's difficult to understand what's happened with hiring in this country in America over the last twelve months. What do you think has happened? What's your understanding of this drop off in hiring. Is it a supply side story? What do you think it is?
I think I think there's a concern of availability at labor because of the population growth, immigration dynamics that I think, again, the administration is trying to get.
Much more fine around exactly what they're.
Doing and not threatening people who've been naturalized citizens and things like that, and that was never what they're intended to do, but people started reading it, so I think and now if you looked our small business surveys, labor availability became an issue again and hadn't been for a good while. And so so I think that that's something we've advised administration to be mindful of because you don't
want that to become a constraint on people's views of growing. Now, the big hiring story here where Davos that make you saying this year is about AI. Last year's about AI that you formed was at AAA that your reformers out A nineteen. The premise was the Fourth Industrial Revolution, which is AI without just saying it.
And so it's not a new theme.
And so I give you since the first time you probably asked somebody who decided the pandemic say post pandemic about is AI going to cause you to change your hiring Let's call it four years, it's called three years.
We hired sixty five.
Thousand people Bank of America two thousand year kids out of school plus outing in school every year now and that's for the turn of rate eight percent we got to hire. In the month of January, we'll hire like thirteen hundred people and we'll have the same headcount we had the month of December. Are these people doing exactly what the people left? Sometimes sometimes those jobs got limited. But that's what management is challenged, just how do you
think to make the changes. We've got to make the transformations to make the customer experience the best it can be, to grow the company and to manage expense. And that means you have to really pay attention to the headcount movement.
And that's why we watch it carefully.
That's where the tension is though. I think for a lot of people, you've got the societal problem on the one hand and on the other hand, and you've got the opportunity and the opportunity is to do even more with what you've already got. And that's the productivity story, and that's what you're selling to invest is that's the picture of the moment, isn't it.
So we had twenty eighty five thousand people in twenty ten when I took when the team took over, we have two hundred twelve thousand people today, and you never heard anything about labor dislocation because we just kept planning ahead.
But that's the application of technology.
Just take the consumer business and I showed an investor date one hundred thousand people to fifty and make it simple.
If you look at that, the business is three.
Times as big in terms of transactions activity.
But that's the power of all You've.
Got eight devices sitting on the tables in front of you and the internet.
Activity of what you'll do.
Two, it's a combination of AI plus alerts and things like that.
People to get.
Focused on just you know, Erica growth in our case, you say no, there's literally a billion alerts that go out, which is basically ourtificial intelligence people set up in advance to tell them things go on. You don't need them to go into Ericuld ask this if check went through my account above twenty five hundred.
Dollars, if you set the alerts, you said something that we reflect on a lot on our show. You said a lot of things, but one thing in particular, that the business would grow, but that your staff would stay about the same size.
And you said that about a year ago, maybe two years ago. That's a near term phenomenon.
In five to ten years, will it be the same or will it start to change in terms of actual shrinkage.
Well, if Havard's writers view of growth will need a lot more human content to keep up with it, and I'll give you this. I'll give you the historical context. In twenty nineteen, I was in a room downstairs and the people were bringing their hands and as the way they do it. Davos said, Oh, this technology going to take away the jobs. And so in preparation, I said, I've got to give some hope here. So I went and did the research. In nineteen sixty nine, American employeed
eighty million people. In twenty nineteen employed one hundred and sixty million people. I think there was a lot of technology and change. It came from nineteen sixty nine to twenty nineteen.
None of that stuff in front of you. It was available.
Have a computer at work, you wouldn't have an email accounts. You're still getting charged by the minute for phone calls. Think about that change, and think about we absorbed eighty million more people working. So I don't want to be Pollyanna about it, but I think you have to be optimistic that if we can grow the economy and grow the thing we will absorb. And by the way, the population to grow US is very modest without immigration, and there's a natural two plus percent of the people or
whatever it is die every year. It's morbid, But that's what happens, and so and so you have burst that kind of replace it, and you know, and people retire. And so that's why I think management's core challenges and manage us through and get employees to take the spirit and help drive the growth in the company and be a part of the solution and help us make it happen.
And my guess is, yeah, it might incrementally move head count, but if we manage it to attrition and retirements and stuff, we ought to be able to manage the outcome.
How did we ever live without the flympog ton No, what was that? An 'ren just the final question you mentioned, Howard. We talked about it, we joked about it. How to the start of the conversation, the relationship with the White House? How would you characterize it in your own opinion?
Right now?
Oh, look, I got you always want to get an invitation. This is dabus invitations show we invite you guys someplace. You want that invitation. So the rationships good. We do continue to give lots of ideas.
And it was ironic that what was fun.
We had a client the last night and Howard came to talk to clients it was late as they finished up the news on Greenland, and he was able to come in and talk about what happened. And those were international clients who admittedly were confused for forty eight hours, you know. And what I've tried to do with the administration's policies and talk, especially people outside nine States, to say,
listen to what they're saying. You can figure out what's going to happen, but don't confuse security or the trade policy. They wanted to get action, and they did, and that's a great thing. And you saw you leave, aside the market reaction which can go up and down on a day, what you saw is the clients say, Okay, I got it. Now let's go set the business plans that will help have that growth in the future.
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