Bank of America Executive Says Consumers Still Spending Pandemic-Era Savings

Consumer spending is still being driven by savings that built up during the pandemic, Bank of America President of Regional Banking Dean Athanasia said Tuesday (June 11).

Speaking at a Morgan Stanley financial conference, Athanasia said consumers’ checking accounts are still 23% larger than they were before the pandemic, Bloomberg reported Tuesday.

Athanasia also said at the event that consumer spending is still growing but has slowed from 5% year over year in 2023 to 3.5% today. Demand for borrowing has also slowed, and credit card loss rates are returning to where they were in 2019, per the report.

Another report found that consumers are becoming more discerning about their spending on nice-to-have retail products.

For example, data from credit card transactions revealed a trend where consumers are willing to splurge on fashionable and trendy items while cutting back on big-ticket purchases.

PYMNTS Intelligence found that consumers have still managed to keep spending, or at least keep their intent to spend intact, even though most of their collective paychecks are earmarked to meet expenses.

Most recently, the PYMNTS Intelligence report “Consumer Credit Economy Monitor: Summer Travel 2024” showed that 48% of consumers have already made travel plans for the summer.

Data from the Federal Reserve and the U.S. Department of Commerce suggested consumers are pulling back on spending and paying down credit card debt.

Reading across the data from the two agencies, lower retail sales in April and a slightly lower total of outstanding credit card debt signal that disposable income and/or savings are being used to pay down debt, PYMNTS reported Friday (June 7).

Discount retailers have seen sales upticks as financially unstable consumers, squeezed by higher prices on everything from groceries to gasoline, increasingly turn to value-focused retailers.

This trade-down behavior at a time of high inflation is providing a boost to companies such as Dollar General, Dollar Tree and The TJX Companies, which are seeing upticks in customer traffic and sales at a time when many retailers are seeing sales declines due to shoppers’ belt-tightening behaviors.