Lower-income Americans are spending at higher rates
Add Axios as your preferred source to
see more of our stories on Google.
Lower-income households increased their spending by 2% in April, while high earners saw a slower spending increase, according to new credit and debit card data from Bank of America Institute.
Why it matters: Consumer spending drives the U.S. economy, and BofA's data provides a counterpoint to warning signs about a spending slowdown at the low end of the income scale.
Zoom in: There are a few reasons that the low earners in BofA's dataset are seeing more robust spending growth.
- They're seeing bigger pay increases than high earners, per the bank's data. The lowest-income households saw a 4% increase in wages, compared to only about 1% for the highest earners.
- When folks with less money get raises, they tend to spend that cash.
- Plus, households saw a bump from tax refunds last month. Savings and checking account balances saw the biggest increases for those earning less than $50,000 a year, BofA's data show.
Zoom out: April retail sales were flat overall, according to government data out this week. But certain categories did see increases.
- Those include gas, clothing and groceries, where lower-income earners would be spending.
Reality check: Spending growth has slowed a lot from last year. "It's not great guns spending growth. It is modest," says David Tinsley, a senior economist at Bank of America Institute.
