Apparently, consumers were willing to spend more in May, despite the worsening buying conditions and poor sentiment.
Bank of America’s (NYSE: BAC) latest Consumer Checkpoint report showed that consumer spending increased by 9% in May compared to the same period last year.
Specifically, Bank of America (BofA) used aggregate credit and debit card spending data from their 67 million consumers and small business clients to gauge sentiment. Additionally, credit card spending gained 16% year-on-year (YoY), while debit card spending rose by 4%.
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With energy prices spiking for most of the year, gasoline spending as a percentage of total card spending increased by 7.8%, so far, the largest increase of this kind in 2022, was noted in February when gasoline purchases were 6.4% of total card spending.
Similarly, spending on services, which makes up 60% of consumer spending, is increasing, with the largest increase seen in households with an annual income over $125,000 who spent the most on pent-up demand for travel and entertainment.
Equally important, David Tinsley, senior economist for the Bank of America Institute, summed up BofA’s view on the data and health of the consumer in the U.S.
“Our card data shows continued growth in consumer spending, but inflation is challenging households’ purchasing power. That said, spending on services like travel and entertainment remained strong, and households continued to have higher savings than they did before the pandemic. Overall, we still remain cautiously optimistic for the U.S. consumer.”
The U.S. consumer seems to be doing well as spending is increasing on more ‘unproductive’ efforts such as eating out, entertainment, and leisure travel.
Similarly, the increase in spending goes hand in hand with the recovery of travel and could represent a sector of the market that is poised to benefit the most in a bleak 2022 so far.
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