According to recently released data from BofA, usage of the bank’s credit cards fell 0.3% in the week ending September 23 compared to the same time last year. In reality, spending on BofA cards has been declining for a few of weeks, and it drops much further if petrol and auto expenditures are excluded.
In a research note released on Thursday, BofA US and global economist Shruti Mishra stated that “after a strong summer, spending appears to have decelerated post Labour Day.”
In addition, Mishra’s team noted that “most other categories have slowed in the last month, especially the discretionary ones” like furniture, with the exception of petrol and electronics.
The recent increase in petrol prices is probably responsible for some of the rise in fuel expenditures, and the Sept. 22 introduction of the Apple iPhone 15 was timed to be one of the busiest days for online electronics sales in about two weeks.
Following a summer-long barrage of stronger-than-expected consumer statistics, which fueled the economy’s faster growth than many had predicted, came the slow Bank of America report. Beyond inflation, Jerome Powell, the chair of the Federal Reserve, has identified this as a significant factor that could lead the Fed to raise interest rates once more.
Following a summer-long barrage of stronger-than-expected consumer statistics, which fueled the economy’s faster growth than many had predicted, came the slow Bank of America report. Beyond inflation, Jerome Powell, the chair of the Federal Reserve, has identified this as a significant factor that could lead the Fed to raise interest rates once more.
Greg Daco, chief economist at EY, referred to the increasing consumer headwinds as a “quadruple threat.”
The economist believes that a potential government shutdown and the ongoing United Auto Workers strike could have a negative effect on economic growth. In addition, spending is anticipated to be affected by rising oil costs and the restart of student loan installments.
Consumers continue to be willing to spend, according to Daco. However, they are operating more prudently now. The downturn should be kept under control as long as the labour market doesn’t rapidly deteriorate, but if it does, it might have disastrous effects.