In May, US retail spending growth, though still negative, reversed course to trend upwards.
Total payment growth across all channels—ACH, bill pay, credit and debit card, wires, person-to-person, cash and cheque—rose by 1.8 per cent YoY in May.
BoA total credit and debit card spending, which comprises around 20 per cent of total payments, increased by 2.4 per cent YoY in May.
The gap between older and younger generations' spending growth has narrowed, which could reflect the fading impact of the 2023 cost-of-living adjustment on social security benefits, alongside strong after-tax wage growth for younger cohorts.
That said, Gen Z and younger Millennials' share of spending on discretionary items is declining potentially due to increasing spending commitments as they get older, the BoA Institute said in a release.
The strength in the younger generations' labour market, including wages and salaries growth, has allowed a majority to navigate these challenges, but there are signs of increased financial pressures for some.
Looking at BoA aggregated credit and debit card data, it appears there has been some slowdown in older generations’ spending growth so far this year.
Interestingly, Gen X spending growth is not only the weakest of all the generations, but the only generation that saw negative spending growth in May, which likely reflects both this cohort’s relatively weaker wage growth compared to younger generations, as well as higher costs in many recurring non-discretionary services, such as property insurance, commonly associated with Gen X’s current life-stage.
Conversely, the spending growth of Gen Z and Millennials appears to have picked up in May. Their spending growth has tended to be weaker than older generations on services, but stronger in retail.
While younger generations card spending growth appears to have picked up, BoA found across a broader range of payment channels that their share of spending on discretionary spending is declining.
Fibre2Fashion News Desk (DS)