Spending Cools as Rates Rise Toward 'New Normal'

Consumer spending is leveling off as price increases catch up to earlier wage gains, moving toward equilibrium.

BofA predicts the Fed will start cutting rates later this year, continuing cuts into 2024 to reach equilibrium around 3-3.5% by end of 2025.

BofA CEO expects consumers will adapt to higher rates, though it may take time. Says people will "get used to mortgage rates of 6, 7 percent."

The current housing market shows similarities to 1980s when rates soared over 18% before falling.

After 15 years of near-zero rates, it will take time for consumers and markets to adjust as rates normalize.