It has been a difficult time to be a retailer or run a restaurant in the United States, whether you’re a chain or an independent. Consumers don’t have it easy either.
Retailers have been undergoing a massive consolidation, with corporate brands snatching up competitors. And a number of restaurant chains have closed locations or filed for bankruptcy in the last year, citing rising costs and underperforming locations.
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It’s challenging to run a profitable business when interest rates are stubbornly high and consumers are tightening their wallets, unsure whether we’re heading into a recession or just experiencing the hiccups that often accompany a new presidential administration.
For consumers, prices are up for just about everything — not just eggs and gas — and inflation is stubborn, hovering at 2.8% for the 12 months ending in February.
Related: Walmart CEO sounds alarm on a big problem for customers
Bank of America data shows consumers are spending plenty, just not in the same places
According to Bank of America Consumer Checkpoint data published in March, consumer spending is especially strong in the services category, including entertainment, and restaurant spending has been relatively stable.
Retail spending was flat but the Bank of America (BAC) analysts concluded consumers are still demonstrating some underlying forward momentum in these early months of the year. One area where people are spending less is on “extras,” such as airline tickets, according to Bank of America credit card and debit card data.
And when it comes to spending on groceries, an increasing number of consumers are opting for lower-priced national retailers like Costco, Walmart and Target; while they’re shopping more often, they’re spending less during each outing, according to the BofA data.
Brian Moynihan, CEO of Bank of America says consumers are still spending.
Bank of America CEO has a contrary take on consumer confidence
But they are spending, says Bank of America CEO Brian Moynihan. In an interview about the Consumer Checkpoint data, he reported, “Our Bank of America consumers are putting 6% more money into the economy than they did for the first two and a half months of last year.” That amounts to $4.5 trillion annually, he said during a CNBC interview.
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Moynihan also said in surveys, consumers are saying they’re pessimistic, “But if you actually look what they’re doing day to day, they continue to spend, which means the economy ought to be holding up better than people think,” he added.
Moynihan also shared that the Bank of America research team does not see a recession coming, but they are continuing to consider the impacts of tariffs. “A lot of people say this could happen or should happen or might happen … but this is what [consumers are] doing so far this year.”
More on retail and bankruptcy:
Walmart store closing, auctioning off laptops and flat screen TVs Home Depot CEO sounds the alarm on a growing problemFamous restaurant files for Chapter 11 bankruptcy
Moynihan emphasized that despite concerns about consumer confidence and external factors like tariffs, actual consumer spending remains strong, and robust spending supports the economy more than pessimistic projections suggest.
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