Lower-income household drove spending growth in July, says BofA's Liz Everett Krisberg

Summary

Liz Everett Krisberg, head of the Bank of America Institute, discusses July consumer spending data, showing a moderation to 5% growth that remains historically strong and driven by discretionary services. She highlights a convergence across income groups as lower-income households accelerate spending, particularly at restaurants, and explains how easing necessity cost burdens and wage gains support continued consumer resilience.

• July card spending growth moderated to 5% from 6.3%, still the third-highest in over four years.
• Slower growth attributed to fading temporary effects (online promotion timing, World Cup wrap), not structural demand weakness.
• Discretionary services, especially restaurants and travel, remain the primary spending drivers.
• Lower-income households drove spending growth in July, outpacing higher-income groups in restaurants for the first time in a long period.
• The K-shaped recovery narrative has given way to a 'Great Convergence' with income groups converging near 5% growth.
• Necessities (gas, groceries) as a share of income are falling for most regions, aided by wage growth and consumer adaptation.
• Consumers across income groups increased full credit card payoff rates, reflecting adaptive, prudent financial behavior.
• Rising wages, particularly for lower-income workers at the fastest pace since March 2023, underpin consumer spending resilience.