What Does the Data Say About the Consumer...
We just got some new data from the second-largest bank in the United States. Bank of America is #2 when using dollar deposits as the measuring stick.
We are looking for data that may suggest that the consumer is weak. The data is encouraging and shows that the consumer remains on solid footing. This data supports what we have heard from other bank CEOs as recently as two weeks ago during their earnings calls.
Here's some data:
5.1% Spending Growth in January
Debit and credit spending grew 5.1% in January compared to 2.1% in December. The spike could stem from an 8.7% social security bump due to an inflation adjustment, strong January jobs reports, and consumer desire to wait for post-holiday promotions. The answer is likely a combination.
However, the bigger question for us is whether the consumer is digging into savings, and if so, what do savings look like?
Savings Remain Well Above 2019 Across ALL Income Groups.
The chart below shows savings relative to January 2019 for each income bracket. The data suggests that consumers have ample cushion.
But are consumers simply using credit cards?
Credit Card Utilization BELOW 2019
The answer to the last question is no. Credit card utilization is below that of 2019. Suggesting that consumers have ample savings while also having elevated access to credit should they need it.
So the final question for this exercise is, how about then wages? Are they growing relative to inflation? If consumers have savings and access to credit, will consumers need to tap deeper into savings and credit in the future?
Real Wages Growing
Over the last two quarters, real wages have been growing. Meaning wages have outpaced inflation as inflation comes down. Also, since 2019 real wages have increased.
When taken all together, the data supports the soft landing or even no landing camp for the economy. At the time of this writing, GDP is tracking to +1.5-2.1% for the first quarter of 2023...
Outro
That is all. Later this week we will be sending out invites to our popular Avory Idea Day webcast session.