Not seeing evidence of lower income consumer slowdown, says BofA Institute’s Liz Everett Krisberg

Bank of America Institute is out with its later consumer checkpoint, the latest consumer checkpoint for April. And joining us right now to talk about it is Liz Everett Crisper. She’s the head of the Bank of America Institute. Liz, it looks like spending was up 1% year over year in April, up 0.3% a year over year in March. Explain to me what this means? What are you seeing? So good morning, great to great to be here. I think that what it means is the consumer momentum is continuing, but the big take away really what what stood out to me in April data is what we didn’t see and that was evidence of the lower income consumer pull back or slow down because that’s what we’ve been hearing about. Yesterday you guys were talking here on the show with the CEO of Uber and Dara said they were looking for signs of a slowdown. They weren’t seeing it, neither were we and the lower income consumer. What we were seeing was what we are seeing is strengthening fundamentals. So wage growth accelerating, it’s up just north of 4% year over year in April for the lower income consumer that’s the highest level it’s been since February of 2023 when we look at deposit February of last year, all right, now it’s down, up 4%. Is I know you’re talking about this with Roger Ferguson earlier this morning that was more double digit growth from 20/22 last year was lower, but now it’s ticking back up again. So you’re seeing the lower income consumer continuing to get wage gains and you’re also seeing in March and April you saw a big uptick in deposit balances and checking and savings accounts. Now some of that of course is tax refunds. So we always see that. But still if I compare the lower income consumer median balance, it’s up 67% relative to pre pandemic. So that’s a that’s a pretty significant uptick. So Roger also told us that CEO’s are far less worried about a recession. Concerns about that have dropped. Other things have taken their place. And I guess what you’re pointing to would be the concern about inflation not tamping down the idea that we’re not going to get back to 2% and as a result the Fed is going to have to maintain if not eventually raise rates. We are continuing to see the spending. So that underlying fundamental is certainly something that we should all be aware of. I think the one thing to think about though is are we missing something, Is there something new. And we did a deep dive into Buy Now, Pay Later, not in this morning’s Checkpoint report, but actually in a report last week to really try and understand like everybody is what is happening with Buy Now, Pay Later And to to kind of set the stage, what we found was 8 1/2% of Bank of America customers had a Buy Now Pay Later transaction in March. Now that pace was up about half a percent relative to a year ago, but the pace of growth had slowed. It was up 2 1/2% before that. So who’s using it? How many people are using? How big of a deal is it? I guess would be younger people, 100% younger people. But also what was interesting and potentially concerning is almost half of the Buy Now Pay Later users were lower income consumers. And the other thing that was really interesting that I thought we looked at was we looked at people who used it once or twice versus heavy users and we define that as someone who had 20 or more transactions a month, right. The fundamentals of that group, their credit card balances are rising faster than everybody else and their deposit levels, their checking and savings numbers are lower than the other. So as if they had it. So they are not only are they continuing to spend as if they had it, their spending growth was twice the level of the spending growth of the light users and even higher you know even more than that then non users. And again you’re talking about 8, 1/2% of our customers that have used buy now pay later in the month. The heavy users though we are concerned is only half a percent. So in terms of the impact on the overall, but very concerning for that particular segment exactly, exactly.