July Consumer Spending Unexpectedly Surges, Signals Big Retail Sales Beat: BofA Card Data

In recent weeks there has been a lot of speculation that the US consumer - and thus overall economy, as consumption is 70% of US economic growth - is finally rolling over: from subpar jobs reports and revisions, to a drop in personal spending, to a second consecutive monthly decline in credit card balances, not to mention the record surge in student loan delinquencies, and a burst of weakness among consumer discretionary stocks, the US consumer appears to be getting sicker by the day. However, with pessimism mounting ahead of Friday's retail sales report, the latest credit and debt card data from Bank of America paints a surprisingly rosy spending picture. 

According to the the most recent report from the Bank of America Institute (available to pro subscribers) which tracks aggregated card data, total credit and debit card spending per household increased 1.8% year-over-year (YoY) in July, the highest growth rate this year and up from the 0.2% (YoY) increase in June (Exhibit 1). Seasonally adjusted (SA) spending per household rose by 0.6% month-over-month (MoM), after a 0.4% MoM rise in June.