Bank of America Payments and Spending Data Shows Consumers Continue to Demonstrate Robust Spending Growth Despite Cross-currents from Rising Utility and Childcare Costs

Rhea-AI Summary

Bank of America reported that consumer spending remains strong, with childcare payments up 9.7% year-over-year in August and nearly reaching pre-pandemic levels at 94% of January 2020 figures.

Utility payments rose by 16% year-over-year, impacting consumer budgets despite falling gas prices. Overall, total payments increased by 13%, with card spending per household rising 5%. However, back-to-school spending saw a decline of 4%. Bank of America's insights suggest that while consumers have solid spending and savings buffers, they are facing pressures from rising costs.

Positive

• Childcare payments per customer increased by 9.7% year-over-year in August.
• Total payments rose by 13% year-over-year in August.
• Customer savings and checking accounts remain elevated compared to pre-pandemic levels.

Negative

• Average utility payments increased by 16% year-over-year, potentially straining consumer budgets.
• Card spending per household growth slowed to 5%, down from 5.3% in July.
• Back-to-school spending decreased by approximately 4% compared to the previous year.

The number of customers making childcare payments in August was approximately 94% of pre-pandemic levels, as parents are returning to the labor market

NEW YORK, Sept. 9, 2022 /PRNewswire/ -- The Bank of America Institute released a new publication today which shows consumer spending continues to increase in August, but some consumers are feeling the effects of rising utility and childcare costs. Bank of America internal data suggests that the average utility payment increased by 16% year-over-year in August, largely offsetting the relief consumers may feel from falling gas prices. However, given demand for energy increases with heat waves, we may not have seen all of these utility increases reflected in bills yet, so average spending could continue to rise in September.

According to Bank of America internal data, the dollar value of childcare payments per customer across payment channels (ACH, credit card, debit card, and online bill pay) was up 9.7% year over year in August. This increase is partially due to higher prices of about 3%, as indicated by the daycare and preschool component of the most recent CPI report, suggesting roughly a 7% increase in inflation-adjusted spend in this category. Economic data suggests that parents – especially women between 25-54 – are returning to the labor market, and the number of Bank of America customers making childcare payments was almost at pre-pandemic levels in August, at around 94% of the level seen in January 2020.

Other highlights of the publication include:

• Bank of America total payments increased 13% year over year in August, a solid increase from the 7% seen in July; this figure offers a holistic view of money flow and includes credit card, debit card, Automated Clearing House (ACH), wires, bill pay, person-to-person, cash and checks.
• Card spending per household increased by 5% year over year, down from 5.3% in July. With US Consumer Price Index (CPI) inflation at 8.5% in July and Personal Consumer Expenditure (PCE) inflation at 6.3%, it appears "real (inflation-adjusted) spending" continues to be under pressure.
• Bank of America data also indicates that customer savings and checking accounts continue to remain elevated relative to before the pandemic.
• Back to School spending was down approximately 4% in the peak shopping period of July 15-August 30 compared to the same timeframe last year, according to Bank of America internal data.

"Consumers are heading into the fall with solid spending and savings buffers," said David Tinsley, senior economist for the Bank of America Institute. "While the drop in gasoline prices has boosted sentiment, consumers have been feeling some pressure from rising utility bills."

Consumer Checkpoint

Consumer Checkpoint is a regular publication from the Bank of America Institute. It aims to provide a holistic and real-time estimate of US consumers' spending and their financial well-being, leveraging the depth and breadth of Bank of America proprietary data. Such data is not intended to be reflective or indicative of, and should not be relied upon as, the results of operations, financial conditions, or performance of Bank of America.

See the Consumer Checkpoint for methodology and definitions.

Bank of America Institute

The Bank of America Institute is dedicated to uncovering powerful insights that move business and society forward. Established in 2022, the Institute is a think tank that draws on data and analyses from across the bank and the world to provide timely and original perspectives on the economy, Environmental, Social and Governance (ESG), and global transformation. The Institute leverages the depth and breadth of the bank's proprietary data, from 67 million consumer and small business clients, 54 million verified digital users, $3.8T in total payments in 2021 and $1.4T in consumer and wealth management deposits. From this robust data set, the Institute provides a unique perspective on the health of the economy. It also elevates thought leadership from throughout the bank that addresses long-term trends and shares these findings with the general public.

Bank of America

Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 67 million consumer and small business clients with approximately 4,000 retail financial centers, approximately 16,000 ATMs, and award-winning digital banking with approximately 55 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and approximately 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

For more Bank of America news, including dividend announcements and other important information, visit the Bank of America newsroom and register for news email alerts.

Reporters may contact:
Melissa Anchan, Bank of America     
Phone: 1.646.532.9241
melissa.anchan@bofa.com

 

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SOURCE Bank of America Corporation

FAQ

What were Bank of America's childcare payment trends in August 2022?

Bank of America reported a 9.7% year-over-year increase in childcare payments per customer in August 2022.

How did consumer spending change in August 2022 according to Bank of America?

Total payments increased by 13% year-over-year in August 2022, reflecting robust consumer spending despite rising costs.

What was the impact of utility costs on Bank of America's consumers?

Average utility payments rose by 16% year-over-year, placing additional pressure on consumer budgets.

How did back-to-school spending perform in August 2022?

Back-to-school spending was down approximately 4% during the peak shopping period from July 15 to August 30 compared to the previous year.

What does the data indicate about consumer savings in August 2022?

Bank of America noted that customer savings and checking accounts remain elevated compared to pre-pandemic levels.