U.S. households — particularly low-income ones — are still sitting on a healthy pandemic nest egg, cushioning them for now against steep price increases on food and energy. That means that even with consumer prices forecast to have risen 8.4% in March, shoppers shouldn’t be running out of cash.
That’s the finding of a new Consumer Checkpoint report from the Bank of America Institute, which showed debit and credit card spending rose 11% last month, or 6.7% on a per-household basis. The gap in spending between income strata is widening, however, with households making less than $50,000 a year spending 4% more in March 2022 compared with March 2021, and those making more than $125,000 a year boosting their spending by 11.8%.
“One of the comforts we take looking at our data set is that consumer deposits are running considerably higher, particularly for the low-income households, than they were pre-pandemic,” Bank of America Institute Chief economist David Tinsley told Yahoo Finance Live in an interview. “On average, the lower-income household has about $1,500 more in the savings and checking account than it did pre-pandemic.”
As Tinsley’s report found, “A measure of median household savings and checking balances for those groups with income below $50K shows these balances are around double where they were before the pandemic. Broader measures of average consumer deposits show even larger percentage increases.”