Starting to see signs of middle- and lower-income consumers getting squeezed: Liz Everett Krisberg

Summary

Liz Everett Krisberg, head of the Bank of America Institute, discusses the April Consumer Checkpoint Report showing overall U.S. consumer card spending surged 4.8% year-over-year, the strongest in three years. However, she highlights uneven resilience: higher-income consumers are driving the strength, while lower- and middle-income consumers are getting squeezed as wage growth lags spending. They are pulling back on discretionary spending and using deposits, tax refunds, and credit card buffers, but these buffers are not infinite.

• Overall consumer card spending rose 4.8% in April, strongest in three years.
• Excluding gas, spending growth accelerated to 4% from 3.6% in March.
• Higher-income consumers saw wage growth of 6%, outpacing spending growth of 5%.
• Lower-income consumers had wage growth of only 1-1.5%, far below spending growth of 3.1%.
• Lower-income consumers are cutting back on discretionary spending and using savings, tax refunds, and credit.
• Credit card utilization for lower-income revolvers is ticking up but not at dangerous levels.
• Tax refund data show only 20% went to spending, 50% to savings, and 25% to debt paydown.
• End-of-month spending dips are typical and not yet signaling exhaustion, but the pattern is being watched.