Feb 9, 2024 - Economy

Cold weather chills January spending

Illustration of Benjamin Franklin wearing cold weather gear and exiting the frame of the one hundred dollar bill.

Illustration: Maura Losch/Axios

Consumers cooled spending last month as inclement weather rocked much of the U.S., according to new data from Bank of America Institute.

By the numbers: Total card spending per household fell 0.2% from the prior year after rising by the same amount in December, the bank says, citing its internal data.

  • Restaurant spending was particularly weak in January, reversing the boom seen the previous month: Spending on cards per household at eateries fell 3.2%, compared to the 3.6% gain in December.

Why it matters: Bad weather — freezing temperatures, snow and rain across the nation — was mostly to blame for the spending pullback as opposed to broad signs of consumer weakness, BofA said.

What they're saying: "[W]here the weather was better, such as the West, spending was resilient, and in the later part of the month, total card spending per household rebounded across the country," economists wrote in the data release.

  • For instance, card spending in the Western region of the U.S. rose 1.7% from a year earlier.

The big picture: BofA suggests there's an ideal backdrop that should allow for consumers to keep spending, including rising after-tax pay for most cohorts and deposit balances still elevated compared to pre-pandemic times.

  • "Solid overall wages and salaries growth means that as inflation comes down the drag on households' real incomes is lessening," the bank's economists write, noting that might be a factor helping improve consumer sentiment.
  • Meanwhile, internal data from BofA show the monthly median household's savings and checking balances are higher relative to 2019 (though below the peak seen in 2021 and 2022).

What's next: A fuller picture of consumer spending comes next week, with the January retail sales report on Thursday.

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