Consumer spending continues to grow, BofA data shows
Bank of America Institute released a new publication today which shows that discretionary consumer spending per household continued to increase in October, up 2.9% year over year (YoY) but down from 3.2% in September, according to Bank of America (BofA) internal data.
Middle- and higher- income households ($50–125k and >$125k, respectively) have replaced lower-income households as the main driver for growth in discretionary spending. In October, the lower-income group contributed just one-fifth of the growth in discretionary spending, compared with approximately two-fifths in October of 2021. This is likely due to lower-income groups being the most negatively impacted by surging prices.
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One area that may buck the trend of slowing discretionary growth is autos. The recent lack of supply has pushed up car prices, and the average auto loan repayment by Bank of America customers jumped 7% YoY in October. But there is a silver lining: there should be a well of pent-up demand as disruptions ease.
Other highlights of the publication include:
• Bank of America total payments increased 9% year over year (YoY) in October; this figure offers a holistic view of money flow and includes credit card, debit card, ACH (automated clearing house), wires, bill pay, person-to-person, cash and checks.
• Within this, overall credit and debit card spend, which makes up over 20% of total payments, was up 8% YoY.
• Total card spending per household was up 3.1% YoY in October, down from 4.4% YoY in September, and remained lower than inflation.
• The slowing of the housing market contributed to weaker goods spending, with furniture spending down more than 10% YoY (over 20% YoY once adjusted for inflation).
• Overall, spending on services continued to look in better shape. In October, services spending, including restaurants and travel, remained well into the positive territory on a %YoY basis, though airline and lodging spending did moderate sharply.
“Our internal data illustrates that the consumer still has forward momentum, though holiday spending looks a little tepid right now,” said David Tinsley, senior economist for Bank of America Institute. “A rebound in auto supply has the potential to mean car purchases could partially offset an overall slowdown in discretionary spending.”