Consumer Spending Trends: Higher vs. Lower Income Growth - BofA's Liz Everett Krisberg

Consumer Spending Insights

• 📊 Consumer spending saw its strongest gain in 20 months, rising 2.4% in November, driven by inflation rather than an increase in transactions.
• 💡 The Bank of America Institute analyzes data from nearly 70 million clients, providing real-time insights into actual consumer behavior.

Income Disparities in Spending

• 📈 A significant gap in spending growth persists between higher- and lower-income households.
• 💰 Higher-income spending grew by 2.7%, nearly four times the 0.7% growth seen in lower-income spending.
• ✈️ The largest spending gaps are observed in big-ticket items like airlines, lodging, and furniture, where lower-income consumers are pulling back.

Category-Specific Spending Patterns

• 🛒 In groceries, lower-income consumers are purchasing more value items, while higher-income consumers are pulling back, leading to higher income spending decreasing in this category.
• 🛍️ Conversely, general merchandise and online retail show less of a spending gap between income groups.
• 🍽️ Both higher- and lower-income consumers are spending more at restaurants, contrary to some industry observations.

Labor Market and Wage Growth

• 💼 The labor market remains strong, with an increase in households receiving income.
• ⚠️ However, wage growth for lower-income consumers is significantly slower than for higher-income consumers, reaching its largest disparity since 2016.
• 📉 This disparity indicates that lower-income consumers are under more financial stress.

Holiday Shopping Outlook

• 🎁 Through October, holiday spending is up 5.7%, indicating increased expenditure.
• 📉 Despite higher spending, the number of transactions is down, meaning consumers are paying more for fewer goods, resulting in fewer presents and less wrapping paper.