div classBodysc17zpet90 cdBBJodivpReuters – U.S. consumer credit and debit card spending so far in 2022 is up 15 on a year earlier, Bank of America research showed on Wednesday, a sign that Americans gloom about the economy owing to high inflation has yet to translate into lower demand.p
pIn fact, lowerincome households – often described as the most vulnerable to an inflationinduced shock – are spending the most relative to their prepandemic outlays, the banks researchers found.pdivdivdiv classBodysc17zpet90 cdBBJodiv
pTo be sure, Bank of America Institute researchers said some of that group‘s spending will reflect high inflation, with March’s consumer price index registering an 8.5 yearoveryear increase, the highest in over 40 years. Also, such households typically spend a higher share of their budgets on food, gas and utilities, which contributed most heavily to the CPI increase.p
p“But the level of card spending in this group is still way above prepandemic levels: the very latest Bank of America debit and credit card spending per household data shows card spending up 33.3 among the below 50K group in three years to the week of 9th April,” they wrote.p
pCard spending this year through April 8 was 15 higher than in the same period last year.p
pSurveys such as the University of Michigans widely followed Consumer Sentiment Index have painted a picture of U.S. consumers who are the most distressed about the economy in more than a decade, often a signal that they may rein in spending.p
p“But people dont always actually do what they say they are doing – sentiment is not the same as action,” the bank wrote.p
p“The actual hard data does not support the gloom.”p
pData from the Census Bureau due out on Thursday in fact is expected to show U.S. retail sales rose 0.6 in March from the month before, a Reuters poll of economists shows, which would mark an acceleration from Februarys increase of 0.3.p
pMonthly growth in retail sales averaged 1.4 over the 12 months through February, more than three times the rate that prevailed in the year before the pandemic.p
pBank of America researchers attributed the ongoing strength in large part to the U.S. job market. The unemployment rate is 3.6 – roughly where it was before the pandemic – there are nearly two open jobs for every unemployed person and hourly wages are rising at their fastest in years, at an annual rate of 5.6. p
p“Beneath this already rosy picture, the story is even better at the lower end of the wage distribution,” they said. Wages in the lowestpaying industries such as leisure and hospitality are up 11.8 year over year.p
pAnother factor continuing to prop up spending, especially among lowincome households, is the cash remaining at their disposal. Bank accounts are still well stocked from higher wages and residual funds from repeated rounds of federal stimulus during the pandemic.p
pHouseholds with incomes below 50,000 a year have at least 1,500 more in the bank than they did at the start of 2019, a figure that represents 5 of that income groups household spending that year.p
p“It is hard to reconcile high bank balances and high card spending with the idea that lower income households are being overwhelmed by higher prices,” the researchers wrote.