Spending Is Rising Faster Among Those Earning Under $50K. Higher Wage Growth Is Helping.

Rounding errors for the rich have become their worst nightmare: spreadsheets filled with #REF errors. In recent weeks, consumer goods companies and restaurant chains have warned that earnings were hit by slower spending among low-income consumers. But Bank of America data shows a different story. In April, credit and debit card spending among those making under $50K rose 2.1% — outpacing the 1.3% change in those making over $50K.

• This data coincides with a deteriorating job market for higher earners — the wages of those making under $50K grew 4% in April, compared to just a 1% bump for those making over $125K.
• A BofA report from last July showed that US households making $125K+ receiving unemployment benefits had risen 60% from the previous year, compared to just 20% for those under $50K.

Catching up, but not fast enough: Per an Economy Policy Institute study released in March, the real wage growth for the bottom 10% of workers increased by 12.1% between 2019 and 2023. While still below the ~20% surge in overall inflation during the same period, this is the fastest growth for any income group. It’s hard to believe, but that’s the strongest growth since 1979.