Bloomberg Audio Studios, podcasts, radio news.
It really does all come down to the consumer and what the appetite there is.
We want to really focus on the US consumer.
Bank of America releasing its final Consumer Checkpoint report of the year saying there were no signs of consumer resilience waiting. In November, President of Retail Banking Holly O'Neal writing, spending momentum carried across all income cohorts through the gap between higher, middle and lower income household spending growth is narrowing.
Holly joins us Now, Holly, wonderful to see. Thank you for big with us morning, Good morning.
How much power is there left in bank accounts, in desire in some of the spending trends that you're seeing right now.
Well, as you said, the consumer resilience is not waning. So across all of the metrics that we look at, they look really healthy and the dry powder is there. So when you look at the money they have and they're checking and savings accounts still significantly higher than it
was even pre pandemic. Now we've seen that come down, but it's still higher, so they still have some cushion in there across all income cohorts, high, middle, low, and in particular the low income cohorts look even stronger when you look at it on a percentage basis. So from a liquidity perspective, they look strong. From a borrowing perspective,
they also look strong. So they're borrowing in and around the same levels that they were pre pandemic when you look at our credit card data, so that looks good. They still have borrowing capacity. The credit environment from a bank perspective is fairly normalized. So I think the resilience of the consumer looks strong. And they're spending also looks good. And we're obviously in the peak spending period of the year,
so their spending looks good. They're spending was up in November, and that matches our data of our surveys that we take pre holiday. What are you expecting to spend during the holidays?
So the reason why I find this so interesting, first of all, is because this has been what has driven us exceptionalism is the envy of a lot of other countries, but also runs counter to what we're hearing from the guidance of certain retail companies.
In particular, how do you swear that well?
I think I think that the consumer. You do have difference in sentiment versus actual behavior. So we look at the actual behavior of the consumer. What are they spending, what are they spending on? So, as I said, spending is up holiday period, it's also up. They're expecting to spend twenty one dollars this holiday period. That's up seven percent. So you know, within that, we're seeing trades to more
discount stores. So they're looking to stretch their dollar a little bit more, and they're seeing the benefit of some lowering prices. So in gas as an example, So in gas, we're saying a higher number of transactions, but the dollar amount is lower because the prices have come down. So they're making trades within their spending behavior and they're really making their dollar go further.
How do you distinguish the sort of trading down whole scenario. How do you say that's stretching the dollar versus this is weakness and this is something that might show some cracks.
I think, in my opinion, it's the consumer making good choices with the money they have to spend. They're very informed because the overall spending number is higher year over year, but then within that they're making trades and adjustments. At the same time, their liquidity levels are still strong and they still have borrowing capacity, So all of those things working together, I think are showing a good, strong, resilient.
Consumer trend has also been this spend on services. Airlines spending still robust, cruises still robust. Do you see that continuing on or could we have any sort of rotate back into good spending.
I think you could see that rotation. As you all know, during the pandemic, people really up the ante on the durable goods, the washers, the dryers. We still haven't seen that come back because those have a long shelf life, So I think as you see that mature, you could see it shift back. But the spending patterns really remain
fairly consistent. Travel experiences, services, those are very strong. We are seeing in this holiday spend we are seeing electronics come back a little bit, so that's also, you know, a beginning trend.
I would say, speaking of the holiday season, a lot of retail analysts have come on and said they're really folks in the fact that there's five less shopping days because it's a shrunk basically holiday season between Thanksgiving and Christmas.
Do you see that having any.
Impact at all on consumers willing to spend.
Now, I think overall the consumer is going to spend for the holidays. You know, it is a more truncated period. But just for that when we when we look at the behaviors, so for the two weeks around Thanksgiving, and it was late this year, right, I think it's as late as it can get. We did see that spend go up, and so I think it's just going to be a more truncated period.
What would you be looking for if you see any cracks of this resilience.
I would look to their spending patterns first. Again, borrowing we will always look at as a bank. But the borrowing behaviors are still really strong. They're still paying credit cards off at a pace that's faster than it was
pre pandemic. That's a really good sign. And then the liquidity in their their checking and their savings accounts, and you know, I think we've seen that really kind of flatten a little bit, and as we get into twenty twenty five, I would I would expect to see that start to grow again.
I'm trying to build on what Amoru is talking about.
There seems to be a disconnect and please help us with this, because on one hand, in this survey, you talk about the gap between the wealthiest and lower income cohorts narrowing actually marginally.
You talk about robust firepower.
In their bank accounts, You talk about ability and willingness to borrow, and then you talk about looking to stretch their dollar.
This kind of behavior that you typically.
See on the brink of something that does feel like, to Danny's point, a weakening.
So what gives why aren't.
People spending more in a traditional and free willing way when the data seems to suggest.
It'd be in a position to do so.
I think that we've seen a permanent shift in what the consumer wants as a liquidity position in their account, right. So I think they got used to that during the pandemic, saying I have more cushion in my bank account and I'm going to keep that there, and then they're making the trades into lower cost goods to make sure they keep that and maintain that level. So, you know, I think that's one of the trends. But I think it's the consumer who is very educated, very aware there are
deals everywhere. They're in social media. We know that thirty percent of our clients are planning to buy in social media this year, which is very interesting, and so I think they're they're very aware and very informed and making choices.
Is that the same thing as price fatigue, because we've heard that a lot among companies that you know, their margins, they can't keep expanding it because there's fears that people aren't willing to pay up. Is that the same different side of the same coin.
I think it could be, yes, And I think you know, it's consumers again making very informed choices and taking control for themselves as to where they can spend their money, where they can budget.
Hally O'Neal of Bank for America, thank you. This was really really interesting, Holly O'Neil. They're with U.