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Bank Data Signals an Increasingly Cautious Consumer and Small Business Owner

Consumer spending on credit cards and debit cards have only grown by 3.5% year over year

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  • Written by  Banking Exchange staff
 
 
Bank Data Signals an Increasingly Cautious Consumer and Small Business Owner

Consumer spending on credit cards and debit cards have only grown by 3.5% year over year, a stark contrast from double-digit growth in previous years. Bank of America’s CEO Brian Moynihan expressed concern that the American consumer and business owners are becoming more cautious with regard to spending habits. He stated this week that the bank’s customers are slowing down on purchases.

While spending is up to $4 trillion, it shows growth dramatically slowing buoyed by high interest rates. With some analysts thinking a rate hike is as likely as a rate cut, the trend may stay for at least into the second half of 2024.

Consumers may also be expressing an increasing concern in the 2024 election that promises to get contentious heading into third quarter. With the recent gains in the stock market, it is not surprising that businesses may be bracing for a slowdown by keeping cash on the sidelines. Even fast-food restaurants are feeling the pullback, and consumers are getting more discerning, according to Moynihan.

Despite concerns, Americans continue to travel and spend on entertainment heading into the summer.

Moynihan stated,  “Business owners are saying ‘I still feel good about my overall business, but I’m not hiring as much; I’m not buying equipment as fast, I’m not making software purchases as fast,’”.

Bank of America and most other large bank analysts are still expecting rate cuts later in 2024, which could ultimately help consumers feel better about using their debit cards and credit cards again.

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