00:00:04.812 Speaker A
We’re coming up on the official start to summer, and new data from Bank of America is signaling a potential slowdown in consumer activity. Seasonally adjusted credit and debit card spending per household declined by 0.7% in May from the prior month. The firm sites a few factors, declining gas spending, payback from tariff driven stock piling earlier in the year, and even poor weather in some regions. But the question remains, could this be a sign of weakening consumer sentiment? Joining me now on set is Mary Hines Drose. She’s the head of Consumer Products at Bank of America. So, Mary, thank you so much for being in studio today. We’re seeing this spending drop. How significant is that in the context of recent trends?
00:00:57.582 Mary Hines Drose
Yeah, it’s the first time we’ve seen a contraction in seasonally adjusted spend in a long time. But when you decompose what’s driving it, it’s okay. We shouldn’t get worried yet. Because really gas prices going down, the transactions are still the same. It’s just costing them less. We also saw during the tariff announcements in April, a lot of people accelerated their spend for certain things like electronics. So April we saw 7.5% increase in electronic purchases, and May is down 1%. So that’s because it’s just a pull forward, not because the consumer is weakening. And we’re in New York. Every weekend it has rained. Yes. So we don’t have the normal summer activity happening, which is also a driver of why spend is a little weak.
00:02:14.772 Speaker A
And what categories has spend been the weakest in? Is it mostly that discretionary spending, or are we seeing a pullback in any essentials as well?
00:02:26.492 Mary Hines Drose
Well, there’s it’s more the um discretionary because essentials are more expensive. So overall this year, we’ve seen higher insurance, utilities, taxes. So therefore, you’ve got to say, well, what am I going to spend less on? So instead of restaurants, doing more groceries, instead of high-end groceries, you go discount. So you’re really making choices in order to manage some of those things that are just simply more expensive.
00:03:05.102 Speaker A
So how does this illustrate this more cautious tone that we’ve been hearing from the consumer? Obviously, a lot has happened since those tariff announcements were announced in April, and we’ve seen various sentiment survey data come out and be very pessimistic. But recently, that’s been the opposite. There’s seems to be a little more optimism out there. What what do you guys see?
00:03:37.602 Mary Hines Drose
Yeah, we definitely saw a bounce back in consumer sentiment in May from April, um which is expected, right? There’s been some trade deals. There’s been less of a certainty that things are going to get more expensive. And so consumers are feeling pretty good, but life has gotten more expensive, so they’re they’re still traveling, they’re just doing it in a more affordable way.
00:04:13.432 Here’s how consumer spending could look this summer
