Did US Consumers Finally Tap Out? BofA Internal Card Data Shows Significant July Spending Slowdown

From Zero Hedge:

Ahead of this Friday’s retail sales report, which bulls are hoping will show a continuation of the strong spending trends revealed in last month’s data, Bank of America is once again the bearer of bad news.

As BofA reports in a note released this morning, according to the bank’s internal aggregated credit and debit card data, consumer spending slowed in July, with retail sales ex-autos down 0.3% mom on a seasonally adjusted basis. This follows the flat pace in June for retail sales ex-autos. As chief economist Michelle Meyer points out, “we think the recent  weakening in consumer spending is largely a cooling down after the exceptionally strong gains from March through May (Chart 1).

Looking at the full year, BofA finds that retail sales ex-autos are only up 0.7% yoy, and points out that Census Bureau data have closely followed the trend in the BAC data, suggesting that the market should prepare for either a downward revision to the June data and/or disappointing July figures: “In our view, this sets up for a softer Census Bureau retail sales report on  Friday – we would not be surprised to see either disappointing July sales and/or a downward revision to June.


It’s not all bad news: based on the BAC card data, BofA found that spending on staples slowed over the course of last year with a slight recovery this year.

However, this appears to be offset by a notable slowdown in spending at restaurants and bars. Based on the BAC aggregated card data, spending at restaurants and bars is increasing at a roughly 5% yoy pace, down from the recent peak in early 2015. The BAC data has been consistent with the trends in the Census data. It also adds:

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