Bank Of America Is "Confused" Why Retail Spending Refuses To Pick Up

Tyler Durden's picture

One month ago, when looking at the latest Bank of America credit and debit card spending data, we presented something that the retailers knew all too well: US retail spending was plunging:

"in today's follow up report BofA reveals that if one goes off actual credit card spending - which conveniently resolves the debate if one spends online or in brick and mortar stores as it is all funded by the same credit card - the picture is even more dire. According to the bank's credit and debit card spending data, core retail sales (those excluding autos which are mostly non-revolving credit funded) just dropped by 0.2% in November, the first annual decline since the financial crisis!"


To be sure Bank of America desperately tried to mask the overall plunge highlighting one off factors (calendar effects, gas prices, weather) however now that it has released its latest data, it is running out of excuses, and as a result is confused, quite literally. This is the title of its latest piece looking at retail spending paterns based on its credit and debit card data: "Confusingly Cautious Consumer"

This is what it said:

Retail sales ex-autos, based on the BAC aggregated credit and debit card data, were unchanged in December on a mom seasonally adjusted basis. This is a sluggish end to 2015, which is in keeping with the year. As the Chart of the Month shows, retail sales ex-autos were only up 0.8% in 2015 based on the BAC card data and are on track to realize a 1.0% gain in the Census Bureau figures.



The internals were ugly. Here is retail sales ex autos:

BofA's take:

  • The seasonally adjusted retail sales ex-autos measure from the BAC aggregate card data was unchanged on a mom basis in December.
  • We think this is largely a payback from the gain in November. As such, smoothing through the recent monthly swings, we find that retail sales ex-autos on a three-month average inched up 0.1% mom SA.
  • We expect a similar pattern with the Census Bureau data and expect the December data to come in weak after the strong gain in November.

Holiday sales were even worse:

The commentary:

"we find that holiday sales based on the BAC data were only up 1.1% yoy in 2015.... This is the slowest pace of holiday sales since 2011, based on the BAC data, suggesting that the consumer was cautious this year despite a supportive economic backdrop. Although it is hard to find a strong correlation with holiday sales and the next year's consumer spending behavior, we believe that the sluggish holiday shopping season in 2015 suggests caution about the consumer outlook this year.

Digging deeper into major spending categories, BofA found that the strongest growth in sales in December, when measured as a mom seasonally adjusted change, was restaurants and drinking places. Which would make sense: after all the US jobs recovery is now one of "waiters and bartenders." On the other end of the spectrum are sales at electronic stores and young adult/teen retailers. Both categories were down sharply in December relative to November, and have been trending lower through the year. As BofA notes, "we continue to see evidence of consumers prioritizing spend on activities and leisure rather than goods."


Finally, the most disturbing trend, one which we first flagged in October, is the ongoing deterioration at luxury retailers, a proxy for upper class spending habits. As the chart below shows, the trend is not your friend.

From BofA:

"Spending at luxury retailers has been declining since the peak in 2011. That said, growth is coming off of exceptionally high levels at the start of the recovery. Our consumer discretionary team suggests that higher income consumer discretionary purchases appeared to hit saturation in 2014/2015."

BofA's conclusion: "While we continue to look for a healthy job market to drive spending, we cannot help but be left feeling cautious."

What, not "optimistically" cautious? 

As for your confusion, Bank of America, allow us to resolve it with the correct answer: soaring Obamacare costs, and record rents.

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order66's picture

You actually have to have money or credit to spend it.

nuubee's picture

BofA must have stopped asking their loan customers what their current job was, or else they would see the large percentage of "Baristas" or "Bartenders"

glenlloyd's picture

Yes, soaring obummercare costs, rising rents and people who have nothing to spend. And those with something to spend aren't.

Of course when you're a bank and you're looking at just your internal card data it's not going to say much, at least not much that anyone is really going to get much out of.

kliguy38's picture

CONfused.....there fixed it for ya

JRobby's picture

This is not news at this point

A growing number in net negative cash flow positions. This trend is accelerating now. People don't like to talk about it because of the stigma.

The stupid banks are lying if they don't know it. But they do.

TheDanimal's picture

Lol, I see this as a symptom of information overload. The decision-makers have so many datasets at their disposal, they just failed to choose the proper ones.

nuubee's picture


A Williamsburg establishment started selling a $100 edible 24-karat-gold-covered doughnut dunked in Cristal-infused icing. It’s $1,000 for a dozen and it’s not even in Manhattan.

Thought Processor's picture



Welcome to the great squeeze.



They know exactly what's going on.  They are the sell side, they're paid to disregard negative facts, and therefor reality.  


Big banks live in a land where everything is great until it's overtly obvious to everyone that it's not.  Then they feign confusion, and after that they belatedly admit that something is amiss in fairytale land, but that it's temporary and one should use this downswell as a buying opportunity.  If you are a big bank, it's never time to sell.  That would be like telling the butter that goes on your bread to go away.  


"It is difficult to get a man to understand something, when his salary depends on his not understanding it.” 

Upton Sinclair

JRobby's picture

Enjoy it while they can

Better have a quick departure plan for Paraguay

cynicalskeptic's picture

Dimon can't have death matches between live gladiators for his amusement (yet) so such trivial antics have to suffice......

White Mountains's picture

Obama Care premiums NAILED a large percentage of people.  They now have much less spending ability.  Simple indeed.

OldPhart's picture

Kind of hard to spend anything after BofAssholes fee'd and stole it.

aliki's picture

make is simple for them in-terms they can understand:

"obamacare, food, rent, college-SPENDING is the new retail-SPENDING"

Jason T's picture

obama care tax is why

erg's picture

It's dead Jim.

Mr. Universe's picture

Dammit Jim, I’m a Doctor not a taxidermist.

carlnpa's picture

Its pretty simple, heath care cost increases, which were huge, have eaten up disposable income.

bigkahuna's picture

this issue is just starting to come home to roost  -- the full impact is yet to come....

Element's picture

Bullshit, they know.

db51's picture

Total Tom Fuckery at play in all of these statistics.   How in the fuck can this shitshow go on when so many businesses are bleeding red fucking ink month after month.   the only ones immune from bankruptcy are those with access to free Fed money and off loading their worthless shitpaper investments onto the next generation.  Mother Fuckers.  I hope someone burns in hell.

JRobby's picture

"Total Butt Fuckery at play in all of these statistics"

Adjusted it

starman's picture

Having a decent job making money and  saving  is so eighties! 



conraddobler's picture

Oh it's because middle America is now wise that it's under siege and they're battening down the hatches.


You beat the shit out of someone every day for a year and then one day they have the fucking audacity to take another route around you?


JRobby's picture

"You beat the shit out of someone every day for" 35 years.

Time to wise up the marks

Rainman's picture

at least the peeps seem to be able to scrounge up enough to pay the Powerball tax.

J Jason Djfmam's picture

Sorry, nothing worth buying.

SDShack's picture

According to the data, the "hobbiests" seem to disagree. I suspect the gun and rare coin collector hobbies are doing great.

eyesofpelosi's picture

Here in Michigan the lottotards are swarming all over...


LooseLee's picture

Hmmmm. Too much debt with insufficient income to service it and consume further. What's so mysterious?

Our 'system' has sown this.

End the system and begin anew.

That is the only way.

More Ammo's picture

"While we continue to look for a healthy job market to drive spending, we cannot help but be left feeling cautious."

Why don't they just ask 0bozo and .gov, they will show them where that "healthy" job market is...


cynicalskeptic's picture

Well, when your income is going DOWN - providing that you're lucky enough to still be employed - AND prices are going UP, what in the hell do they think is going to happen?

Excepting our lords and masters in the top .001% it seems that damn near everyone else - even those still employed and 'doing well' - are seeing CUTS in income with the 'Be thankful you still have a job' message from their employer.  And even that is a matter of time for many.  I know a few who are waiting for the ax to fall - one at JPM who's 'training his replacement in India' ('Offshoring' not outsourcing as the guy in India works for JPM, albeit at a far lower salary).

Meanwhile prices for damn near everything that matters - like FOOD - are going up at rates far outpacing the 'official' rates of inflation.   And by the way.... college tuition continues to rise at a ridiculous rate so between that and health care premiums, not to mention local taxes, there's a lot less 'discretionary income' left.   Those that are wise are paying off debt and saving anything they have left instead of spending mindlessly.

Perhaps they should be complaining about those in the top .001% who are raking it in at even higher levels - making money faster than they can spend it.....but then how many second, third and fourth houses does someone need and how many Bentley's or Ferarri's can you drive?  I suspect much of the money at that level is currently being spent to buy the next President - so as to insuure that those with the $$$$, keep their $$$$ (and get more $$$$ until there's nothing left in the bottom 99.99% and Feudalism can be officially restored.

silverer's picture

If anybody from the banks reads these blogs, I'd like to explain to you that you've done a pretty thorough job of screwing things up from the last time it all crashed.  I'm just about to come up level after half my customers went bankrupt, and now you have engineered a repeat.  After this one, I'm going to grow my own food and stop paying my mortgage until you learn how to curb your greed and bad behavior.  Negative interest rates, indeed!

cynicalskeptic's picture

One of the big secrets is how many people have STOPPED paying mortgages.  Unless you're in a really hot market, where demand actually exists, you can safely stop paying and get away with it for YEARS.   Banks aren't even tryiong to foreclose because they don't want to book the loss.  An unpaod mortgage remains on the books as a full value 'asset'.  A short sale or foreclosure gets booked as a loss and they don't want THAT.  Banks would rather a place remain occupied instead of vacant to preserve its value - I suppose in the lame hope they will be able to sell it later for the value on the books.... bwahaaaaaaaa

Grandad Grumps's picture

Why? The models include incorrect assumptions about "human" behavior. Duh ...

Those who think they control the markets, technology and propaganda are taking things in a way the current generations of people do not want to go.

Eventually people realize that the canyon they are being driven into ends at a cliff. People are not buffalo.

If it will ever work and the controllers are willing to spend the time, more memory will have to be erased and more drugs will have to be used to dumb people down EVEN FURTHER. People will need to have the mentality of buffalo.

dizzyfingers's picture

"Why Retail Spending Refuses To Pick Up"


'Cause we've had enough!!!!!!!!!!!!!!!

GeezerGeek's picture

It would look even worse if they excluded expenditures on guns & ammo.

One-Eyed-Thong's picture

Whoa... i'm on the internet...

moonmac's picture

When your weekly sales numbers at work drops from $80K to $20K you just might wonder if spending $3K on a Florida vacation is really the right choice.

Panic Mode's picture

No, deflation is blind. Deflation also happens to people wages. So when people have less income, they stop spending. Also that means people in the lower wages will get lower or zero income without jobs. All these educated tossers airing their balls puffing out crap.

cynicalskeptic's picture

Wage deflation for the masses is all too real.  Our income is down by a significant amount.  Too bad the proces of everything else are going up.  If you were smart enough to live close to work the decrease in gasoline doesn't make much difference and the cost of fuel oil hasn't dropped much (not compared to the orice of crude).  Anyone price a rib roast lately?  You'll have to finance those soon - beef is way up as are most foodstuffs.

Spungo's picture

People with minimum wage jobs don't spend much? I'm completely shocked.

MadVladtheconquerer's picture

Confusion is not new:  Vinnie Barbarino brught it to our attention 40yrs ago!

plane jain's picture

So confusing...flat wages with rising prices. Health insurance/healthcare, rent, college tuitions...we aren't just cautious, we are broke.

A recent thread on my moms message board was about not being able to afford to use health insurance due to high premiums/high deductibles. 

I wonder what percentage of people are spending as much on health insurance/health care as on housing?

I do know there were many posting that they are paying $1,000+ for just health insurance. Our premiums for a family of 3 are $16,000 a year. My spouse's employer pays the bulk of it, but, hey, if they weren't paying so much for health insurance maybe we could just get a bigger paycheck.

FWIW our mortgage payments are about $15,600 a year and that includes property taxes and home owner's insurance.

cynicalskeptic's picture

Local taxes  around here (NYC burbs) are so high it's liek haviung another mortgage.  Astounded at how many people whose kids have finished school who've moved to 'cheaper' localities.   But many are finding the cost of moving combined with the lower level of services in their new community (usually along with a longer and more expensive commute) make it a wash.   Stay in the paid for more expensive place or 'downsize' for little or no savings.... for now, it makes more sense to stay.

roddy6667's picture

Wages are not flat. American wages are now at 1967 levels when you adjust for inflation. Also, household debt is up, and half of all households don't have $1000 cash to their name. 

Kefeer's picture

You just had to spoil it by pointing out that pesky inflation adjustment - good point!

lipskid's picture

Healthcare costs soaring, rent soaring, food cost soaring and wages are flat. Discretionary spending must go down, where do I pick-up my PHD in Economics?

yogibear's picture

The small fish are dead.

Eventually it hits the big fish, after they eat each other.

Process of financial cannibalization may take a while.