In the United States, in March 2023, household spending on credit and debit cards increased by 0.1% compared to the figure recorded for the same period last year.
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The Bank of America Institute in its Consumer Checkpoint report, released last Wednesday, April 12, notes that these growth rates are the slowest since February 2021. Compared to February 2023, March household spending on cards decreased by 1.5%, taking into account seasonal fluctuations.
The report points out the reasons for the slowdown in growth such as a decrease in the rate of increase in wages, a low level of tax refunds, and the expiration of emergency funding under the supplementary nutrition assistance program. In March, after-tax wage growth slowed to 2% year-on-year, becoming the lowest since June 2020. Total tax refunds decreased by about 10% compared to a year ago. The increased benefits under SNAP expired in most states at the end of February.
The report says that extraordinary wage growth was one of the main factors in ensuring sustainable consumer spending. It is this circumstance that has allowed American consumers to spend significant amounts of money in conditions of high inflation in 2022. The latest internal data from Bank of America confirms the slowdown in the increase in wages.
The authors of the report pay special attention to the fact that consumers still have significant financial reserves at their disposal. According to them, this is confirmed by the lower rates of credit card use compared to 2019. At the same time, experts emphasize that there are signs that a decrease in activity in the labor market and a slowdown in wage growth may become stable trends of a long-term nature.
Studies show that American consumers, in the case of spending on products, consider favorable offers as the main priority when making purchases.
Inflationary pressures cause households to lower the prices of their products due to a decrease in quality, quantity, or a combination of both. The purpose of these actions is to reduce costs.
As we have reported earlier, Bank of America introduced a fraud prevention tool.
Serhii Mikhailov
Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.
