Government numbers indicate consumer spending growth is slowing fast, totaling only 0.1% in July after a 1% jump in June.
But August data from the Bank of America Institute, the bank’s internal think tank, paint a much brighter picture. BofA total payments surged 13% year over year in August, accelerating from July’s 7% climb.
Those payments include credit cards, debit cards, automated clearing house (ACH), wires, bill pay, person-to-person, cash, and checks.
Card spending per household gained 5% year over year in August, easing from 5.3% in July. To be sure, with consumer prices rising 8.5% in the 12 months through July, it appears that “real (inflation-adjusted) spending continues to be under pressure,” the study said.
Still, “consumers are heading into the fall with solid spending and savings buffers,” David Tinsley, senior economist for the BofA Institute, said in a commentary accompanying the statistics.
Utility Bill Blues
But,“while the drop in gasoline prices has boosted sentiment, consumers have been feeling some pressure from rising utility bills.”
The average utility payment increased by 16% year over year in August, as energy prices soared amid the Ukraine-Russia conflict.
Another cost on the rise is childcare. Childcare payments per BofA customer climbed 9.7% year-on-year in August.
“This increase is partially due to higher prices of about 3%, as indicated by the daycare and preschool component of the most recent CPI [consumer price index] report,” the study said. That “suggests roughly a 7% increase in inflation-adjusted spending in this category.”
In addition, “economic data suggest that parents -- especially women between 25 to 54 -- are returning to the labor market,” the report said.
The number of BofA customers making childcare payments in August reached about 94% of the total registered in January 2020, prior to the pandemic.
Buoyant Savings and Checking Accounts
On the positive side of the ledger, BofA customer savings and checking accounts continue to remain elevated relative to before the pandemic. But the report didn’t provide exact figures outside a chart.
Meanwhile, in an ominous sign for the rest of the year, Amazon (AMZN) sellers are prepared for a weak holiday shopping season, with inflation putting a lid on consumer spending, Bloomberg reports.
Merchants are worried they’ll have to lower prices to move product. U.S. online sales will increase just 9.4% this year, the first time growth has fallen into single digits, according to Insider Intelligence, as cited by Bloomberg.
“Consumers don’t seem to be spending much on anything beyond basic necessities, so sellers have to offer discounts, coupons and aggressive marketing, which can be expensive,” Lesley Hensell, co-founder of Riverbend Consulting, which advises Amazon sellers, told the news service.
