A Bank of America Institute report on July shopper funds exhibits a blended inflation image for customers.
The July shopper worth report offered blended information on inflation, with costs unchanged within the month from June however nonetheless up 8.5% from a 12 months earlier.
A report on July shopper funds by Bank of America Institute, the financial institution’s inside suppose tank, equally confirmed blended outcomes. Total funds rose 7% in July from a 12 months earlier, about equal to the rise in June.
Credit- and debit-card spending, which account for greater than 20% of complete funds, gained 8% in July from a 12 months earlier, whereas card spending per family climbed 5.3%, easing from a 5.7% ascent in June.
“Despite worries about the consumer, the nominal spending growth rate on Bank of America cards has held up, demonstrating steady resilience,” the report stated. But, “real [inflation-adjusted] card spending continues to be under pressure.”
Rent Woes
Rent stays an issue for the one-third (34%) of households that don’t personal their residence. Median lease funds climbed 7.4% year-on-year in July, with middle-income ($51,000-$150,000 a 12 months) and youthful renters seeing the biggest will increase.
The median lease fee appreciated 16% in July from a 12 months earlier for Generation Z (born 1991-2012), in contrast with only a 3% achieve for Baby Boomers (born 1946-1964).
To make certain, “lower gas prices provided some relief in July, and promotional events from retailers boosted goods spending,” the report stated. Gasoline costs dropped 7.7% in July from June, in response to the federal government.
Gasoline spending as a share of complete card spending per family dipped to a median 9.3% in July for lower-income households (lower than $50,000 a 12 months), from a peak of almost 10% in June, in response to the Bank of America Institute report..
At the identical time, many retailers ran gross sales to rid themselves of bloated inventories. And Amazon’s (AMZN) – Get Amazon.com Inc. Report Prime Day occasion ran July 12-13. But total, “goods spending faced great downward pressure as spending rotated to services,” the report stated.
Strong Savings Balances
Meanwhile, “household deposit and savings balances remain elevated, and consumers haven’t yet showed signs of increased borrowing,” the report stated. “Consumers still have dry powder.” (Dry powder is out there money.)
The largest proportionate will increase in median financial savings and checking balances got here in lower-income households.
“Looking at the balances across age groups, there is little difference, aside from Gen Z, where the larger increase may reflect natural progression of this age group into careers,” the report stated.
Bottom line: “Our internal spending and payments data suggests consumers are not wilting in this summer heat,” Anna Zhou, economist for the Bank of America Institute, stated in commentary accompanying the report.
“While wallets are getting squeezed for the 34% of U.S. households who are renters, relief from lower gas prices and retail promotions encouraged consumers to continue to spend throughout July.”
Source: www.thestreet.com