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Plunge In Gas Prices Sparks Surge In Real Spending, But Low-Income Consumers Remain Stressed

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In the aftermath of the recent plunge in gas prices, which has pulled the national average price to just above $4.00, two months after hitting an all time high north of $5.00, traders have been curious to see how retail spending will be impacted by this welcome development. And while the official data will be published next Wednesday, today we got an early glimpse thanks to the latest BofA card spending data which measures aggregated BofA credit and debit card data, and which was up 5.3% year-over-year (yoy) on a per household (HH) basis in July.

To be sure, the July number was artificially inflated in part by Prime Day and related promotions, which occurred in June last year. Which is why on an adjusted basis, July card spending per HH fell 0.2% month-over-month. It’s also why BofA’s economists forecast a 0.2% mom decrease in the Census Bureau’s July retail sales ex-autos figure, well below consensus of a +0.2% print.

But in a favorable twist, July’s ostensible weakness was partly due to the plunge in gas prices, which led to a 5.8% mom drop in gas spending

According to BofA calculations, the share of gas in retail card spending ex autos fell by 0.7%, the largest single-month decline since April 2020

This has given consumers leeway to spend in other categories, and BofA expects a 0.9%

 

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