00:00 Speaker a
So let’s talk about American consumers David, our friends and neighbors, and how much they spend and where they spend. You said April showers here have not weakened spending yet. David, take us through the data. What do you see?
00:18 David
Yes, it’s great to be here, Josh. So what we’re seeing is that when we look at 69 million Bank of America customers, consumer spending remains forward-looking in the first three months of the year. We still see them spending on credit and debit cards and increasing their spending. Then we went into April, so we made these tariff announcements. Obviously, consumers are still spending when they are not very confident. So, in the first three weeks of April, credit and debit card spending in our data rose by 3.1% in the seven days ending on the 19th. I think it’s still spending.
01:57 Speaker a
So, for economists like you, David for his own economists, a tricky question is their spending, how much do you think David is buying before the potential tariff impact?
02:16 David
Yes, I mean, I think that’s a good point. So basically, when you’re parsing data, when we look at specific consumer durables, you’re thinking about their electronics, furniture, building materials. We did see the March and April ramps, and I think in particular both areas, I think that’s likely to be in it. A person’s electronic devices are cars. So when we look at our auto loan application data, what we see is that in the last week of March and the first three weeks of April, year-on-year growth jumped to about 20% in those loan applications. So, I think people are particularly capable of trying to be ahead of the car tariffs.
03:56 Speaker a
David, does any evidence you see in the data suggest that the stock market sell-off completely affect spending?
04:13 David
Good question. No, no, no, no. So of course you have to remember that assets are very biased in the economy. According to income, up to 20% of households own 80% of direct stock. So those outside of retirement accounts. When we look at this data, we look at the higher income population, which are above the highest 30%, and then go to the highest 5% at the top. Their spending growth is consistent with almost everyone else, and if anything, the shadow is more positive. So there is no sign that they are pulling backwards. I think what economists call their wealth effects is essentially a fairly long variable lag. We may see this in the coming months. We will definitely look carefully, but now, there are not many signs.
