U.S. consumers, low-income households included, still spending, BofA research says
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Loading... - Valentina Bianco
- 14 Apr 2022
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U.S. consumer credit and debit card spending so far in 2022 is up 15% from a year ago, Bank of America research showed on Wednesday, a sign that Americans’ despair about the economy due to high inflation is yet to come. Translation has not happened less demand.
In fact, low-income households – often described as the most vulnerable to inflation-induced shocks – are spending the most relative to their pre-pandemic outlays, the bank’s researchers found.
To be sure, some of that group’s spending will reflect higher inflation, said Bank of America Institute researchers, with the March consumer price index registering an 8.5% year-over-year increase in more than 40 years. is the most. In addition, such households typically spend more of their budget on food, gas and utilities, which contributed the most to the CPI growth.
“But card spending levels in this group are still above pre-pandemic levels: the very latest Bank of America debit and credit card spending per household data shows card spending among the group below $50K over three years. 33.3% is the week of April 9,” he wrote.
This year till April 8, the card spend was 15% higher than the same period last year.
Surveys such as the University of Michigan’s widely-followed Consumer Sentiment Index paint a picture of American consumers who are most distressed about the economy in more than a decade, often a sign that they rein in spending. can.
“But people don’t always really do what they say they’re doing – emotion does not equate to action,” Banks wrote.
“Actual hard data does not support sadness.”
In fact Census Bureau data due on Thursday expect US retail sales to rise 0.6% in March, a Reuters poll of economists shows, which would mark an acceleration from a 0.3% increase in February.
Monthly growth in retail sales averaged 1.4% in the 12 months to February, more than three times the rate prevailing in the year before the pandemic.
Bank of America researchers largely attributed the ongoing strength to the US job market. The unemployment rate is 3.6% – roughly where it was before the pandemic – with about two open jobs for every unemployed person and the hourly wage rising the fastest in years at an annual rate of 5.6%.
“(B) Under this already rosy picture, the story is even better at the lower end of the wage distribution,” he said. Salaries in the lowest paying industries such as leisure and hospitality grew 11.8% year over year.
Another factor driving up spending, especially among low-income households, is the cash remaining at their disposal. Bank accounts are still well stocked by high wages and residual money from repeated federal stimulus rounds during the pandemic.
Households earning less than $50,000 a year have at least $1,500 more in the bank than at the beginning of 2019, a figure that represents 5% of that income group’s household spending in that year. Read More...
