Even with rising inflation and gas prices, Americans seem to keep spending on non-essential items. Bank of America CEO Brian Moynihan shared this insight during an interview with NBC News.
“We’re focusing on actual spending, not just consumer sentiment,” Moynihan noted, adding that people are still finding ways to use their money. Data from Bank of America showed a 5% increase in credit and debit card spending in May compared to the previous year, with consumers continuing to spend on vacations and dining.
However, there’s a noticeable shift in how consumers are responding to higher gas prices. For instance, Moynihan mentioned that even with considerable marketing efforts from premium pet food brands, shoppers are opting for more affordable alternatives instead of splurging on luxury options.
The University of Michigan’s consumer survey revealed that early June brought a slight uptick in consumer sentiment after the index hit its lowest point in May. The fluctuations in sentiment correlate closely with gas prices; as they surged in April and May, confidence dipped. Fortunately, a decline in gas costs at the start of June offered a 9% boost to consumer outlook.
Despite this improvement, consumer sentiment still remains about 13% lower than it was back in January and 19% below June of the previous year. Joan Hsu pointed out that consumers continue to prioritize essential financial issues.
The latest consumer confidence index from the Conference Board indicated that worries about gas prices and inflation due to global conflicts played a significant role in the decline of consumer confidence in May. Many respondents expressed their concerns, leaning towards pessimism regarding the economy.
Moynihan emphasized the ongoing concern about affordability, cautioning that a shift from merely talking about problems to taking action might signal deeper economic troubles for the nation.
