Bank of America Corp. said customer spending continues to show signs of resilience despite surging inflation, with pent-up demand for travel and leisure countering rising gas prices and other increased costs.
Spending on credit and debit cards was up 11% from a year earlier in June, compared with a 13% increase in April and 9% gain in May, the bank said Thursday. The higher spending comes amid rising prices and fears that the US is poised to slide into recession.
“Consumers are in better shape to respond to a slowdown in the US economy than they have been in many previous business cycles,” David Tinsley, senior economist at the Bank of America Institute, said in a statement. “But with some slowdown in services spending, we may need to wait until the summer is over to get a clearer picture of the strength of the underlying consumer momentum.”
Financial giants have been reporting signs of consumer strength even amid soaring inflation, which accelerated to a new 40-year high in May, and rising interest rates. The largest US banks saw spending on credit cards surge in the first three months of the year as customers began traveling and dining out again following Covid-19 lockdowns.
While overall spending has remained strong among Bank of America customers, growth has slowed on a per-household basis, climbing 3.3% in the 28 days through June 30 from the year-earlier period. Some of the slowdown may be the result of a pullback from previous pent-up demand for vacations, the Charlotte, North Carolina-based company said.
For lower-income households, Bank of America saw total card spending excluding gas and groceries contract 1%. Among higher-income households, such spending “remained positive but is on a downward trend,” the company said.
This article was provided by Bloomberg News.