Latest news with #DavidTinsley
Yahoo
5 days ago
- Business
- Yahoo
Consumer health is 'relatively sunny,' but some risks persist
Retail sales rose 0.5% in July, slightly below Wall Street's estimates. Meanwhile, preliminary consumer sentiment for August declined to 58.6 from the previous reading of 61.7. Bank of America Institute senior economist David Tinsley and Fitch Ratings senior director David Silverman join Market Catalysts with Julie Hyman to discuss the data and the health of the consumer. To watch more expert insights and analysis on the latest market action, check out more Market Catalysts. You mentioned the your bank's credit card data, which is a great source of what people are doing, sort of, in real time. What about its predictive ability, right? Are there any signs telling you whether, to David Silverman's point, you know, kind of whether that it is going to keep up going into the fall? Well, I'd point to two things in our latest report. Uh, and in a sense they're cross-cutting. One is, we see weakness at the lower income consumer end. So in our data there's virtually zero growth year-on-year in consumer spending for the bottom third of households by income. But the good news, I think, is that middle and higher income households are continuing to spend. So, I think, you know, that does bode uh, reasonably well in terms of going forward. And then the other thing I'd just mentioned is that when you look at some of the metrics of financial health for the consumer, like their ability, essentially, to spend on their credit cards, whether they're paying off their full balance every month, these look pretty good, better than they did in 2019. So, I think, you know, there's some, there's some, you know, clouds out there if you like, but by and large, the picture is still relatively sunny. Um, David Silverman, what about though, in particular, that low-income consumer? Um, who are the retailers that are sort of most exposed to that consumer? Can we expect that they are going to see some struggles? Yes, so, those, those retailers would be discounters and dollar stores are some of the primary examples. What's become interesting over the last couple of cycles is a lot of these retailers, uh, will both benefit and be negatively impacted by some of this dislocation in the low-end consumer. Uh, we could see trade down that benefits, uh, companies like Walmart and, and, and Target and Costco and, and Amazon. Uh, that being said, a lot of these companies, uh, over the last number of years have added discretionary products to their mix. Uh, and there's some risk that the low-end consumer pulls back on, uh, purchase of these types of items. Uh, so we could see some, some positives and some negatives, uh, that a bit offset each other, uh, as you know, the, the low-end consumer struggles a bit in the current environment.
Axios
5 days ago
- Business
- Axios
The economic party rolls on for the rich. For everyone else, not so much
Rich Americans are spending at a higher rate this year — everyone else is basically slowing their roll. Why it matters: New data makes clear that while the good times continue for higher-income earners — strong wage growth, less debt — lower-income Americans are under increasing financial stress. By the numbers: Spending increased nearly 2% in July from last year for higher income households, and 1% for middle-earners, according to a Bank of America Institute analysis released earlier this week. For the lowest third of households, those earning roughly $50,000 a year or less, spending growth was zero, zip, zilch, nada — 0.0%, per the analysis, which looked at internal credit- and debit-card spending data from BofA. Wage growth is slowing at the bottom, too. Up just 1.3% in July from last year, according to the bank's after-tax wage and salary data. That's compared with 3.2% for higher-income households, those earning above $120,000 a year. The big picture: For a few years after the pandemic, low- and middle-income Americans came out ahead — able to pay down debt with increased government support, and fast-growing wages courtesy of a hot labor market. For a time, pay rose faster at the bottom of the income scale than at the top. Those days are in the rearview mirror, as the WSJ recently pointed out. Data from the Atlanta Fed shows that wage growth among the bottom quarter is now slower than at the top — reversing the pandemic-era trend. Where it stands: The Boston Fed looked at even more credit card data for an analysis out Wednesday. It found spending has grown only modestly for the lowest earners — while it is still climbing sharply for those earning more than $120,000. At the same time, they found credit card debt is now back above pre-pandemic levels for low- and middle-income groups. Those at the high end? They've got room to run. Debt is still below 2019 levels. And their spending is propping up the economy, the report concludes — following similar research from Moody's. Zoom out: Consumer spending is the 800-pound gorilla when it comes to the American economy — making up nearly 70% of GDP. And lower earners already do much less of it — the lowest 30% of households by income account for less than 15% of overall U.S. consumer spending, according to government data cited by BofA. Reality check: That means, the spending slowdown at the lower end is less likely to stall the economy — that is, if the rich and middle-income earners keep spending. And, overall the economy is still holding up, and spending in the aggregate increased in July, per BofA. "If middle income households keep their heads above water, as they seem to be at the moment, then the overall picture for the economy is fairly solid," says David Tinsley, senior economist at the BofA Institute. What to watch: The monthly government report on retail sales will be out later Friday morning. It should provide more details on how American consumers are spending. Meanwhile, there are more headwinds on the horizon for lower earners. Tariff increases are particularly painful — as this is a group that spends a larger share of income on goods, i.e., the stuff that is more exposed to tax increases on imports. And the cuts in health programs and social services included in the "big, beautiful bill" will make them poorer, as a new Congressional Budget Office analysis pointed out earlier this week.
Yahoo
16-05-2025
- Business
- Yahoo
An unexpected theme is coming out of a turbulent sector: Stability
Stability isn't the word that comes to mind when the subject is US airlines. Yanked guidance, persistent headlines of service disruptions, and airport calamities have forced less-flattering associations with the sector. But a steadiness is nonetheless the theme of the moment (apologies to travelers in Newark) as airlines share signs of booking stability even as trade and travel uncertainty cloud the outlook, alongside safety unease. By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy In a new report Thursday, on Bank of America's Industrials, Transportation & Airlines Conference, airline management teams focused on the sturdiness of booking trends, especially at the three legacy carriers, United (UAL), American (AAL), and Delta (DAL). They also noted the continued resilience in premium travel, with softness mostly in main cabin, reflecting similar comments the companies made during their earnings calls last month. Corporate travel growth is off the peak seen earlier in the year, according to the report, but is still positive. Despite it all. That meshes with accounts outside of the sector that appear to show business-as-usual consumption in some respects but cautious spending elsewhere. More affluent customers continue to shell out, whereas lower earners are pulling back. As Delta Air Lines management noted, the bulk of weakness has come from off-peak bookings in the main cabin. American Airlines and Southwest Airlines (LUV) both pulled their outlooks for 2025 when they reported last month, citing uncertainty that weighed on demand. Delta did the same. But since then, stability has taken hold, according to the report. At the conference, Frontier also noted that passenger demand has strengthened as consumer confidence improved, allowing the company to raise fares. Another report on Thursday by the Bank of America Institute showed further signs of spending weakness, as well as bifurcation. "Travel and tourism spending has gotten off to a slower start in 2025 than in the past few years," according to the report, which measured household card spending from the start of the year through the beginning of May. The data showed spending on airlines and lodging was notably weaker. One potential reason behind softer travel spending, economists Taylor Bowley and David Tinsley said, is the sharp drop in consumer sentiment this year — a key theme that has rattled Wall Street and fueled concerns of a deteriorating economy. "With lower confidence and rising economic uncertainty, it could be that consumers have decided to defer some relatively large, and often highly discretionary, travel spending," they said. Survey data also showed that lower-income households appeared more inclined to vacation within the US this year than in 2024, and that a higher share of less-affluent people are planning not to travel at all. But taken together, within the context of cratering consumer confidence, things seem to be pretty OK in a tough industry, despite it all. It's becoming increasingly clear that the brief, wondrous era of post-pandemic travel is well behind us. Trade war summer doesn't sound that enticing. But if this was the sentiment pre-China pact and trade war thaw, maybe there will be a higher cruising altitude in the months ahead. Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban. Click here for in-depth analysis of the latest stock market news and events moving stock prices
Yahoo
29-04-2025
- Business
- Yahoo
A tale of 2 consumers: High earners doing fine while lower-income households 'under some pressure'
Despite stock market volatility and tariff uncertainty, the US consumer is still spending. But company commentary in recent earnings reports and Wall Street data points are reasons for concern, especially for lower-income households. "The lower-income consumer is under some pressure," David Tinsley, senior economist at Bank of America Institute, told Yahoo Finance on Monday. While BofA's latest research shows the share of households carrying a credit card balance has declined year over year, a growing number of lower-income households are becoming more reliant on credit to maintain spending levels. The firm's research also points to higher-income households' relatively stronger spending growth compared to those with lower incomes. "Higher income" refers to households significantly above the population average, earning over $150,000 per year, while lower income defines the bottom third of households, or those that earn around $60,000 or less. Another troubling sign: Wage growth among low-income earners in March reached its lowest level since April 2017. "When you look at wage growth by income, it's the low-income consumer where wage growth seems to have slowed the most," said Tinsley. "Prices are rising, [but] their wages aren't rising as much. That's causing some pressure." Commentary on earnings calls also points to a tale of two consumers — one that remains solid and spending, and the other more cautious. "Last week, it became a bit more clear to us that there are two tales of the consumer going around, and that both may be correct — they are just capturing different perspectives," wrote Lori Calvasina, head of US equity research at RBC Capital Markets, on Monday. Her team noted that "consumer companies continue to have a more negative tone when talking about the consumer," while financial-related companies and telecom providers have noted a strong customer. Earlier this month, American Express posted better-than-expected results amid strong spending from its affluent customer base, which was not showing signs of decelerated spending. The sentiment was echoed by Capital One CEO Richard Fairbank during the credit card company's quarterly call last week. "The US consumer remains a source of strength in the economy. That's true for almost any metric that we look at," said Fairbank. Verizon noted similar strength in the consumer. "When it comes to consumer behavior, in general, we haven't seen any major consumer shifts in behavior ... of course, we have a product of mobility and broadband that's so essential for our consumers," Verizon CEO Hans Vestberg said during the company's earnings call last week. But consumer-facing companies ranging from PepsiCo (PEP) to Procter & Gamble (PG) have pointed to a pressured customer. "Consumers are feeling more challenged with their disposable income. And that obviously is different for different levels of income across the American consumer," PepsiCo CEO Ramon Laguarta told analysts following the company's earnings report on Thursday. Procter & Gamble management highlighted a "pause from the consumer" during the consumer products company's earnings call. "That pause is reflected in retail traffic being down," P&G CFO Andre Schulten told analysts last week. Even American Airlines (AAL) noted that while international and premium travel was strong last quarter, the carrier's domestic "main cabin" demand was weak. Southwest's (LUV) CEO Bob Jordan also said leisure travel demand was down as the airline moves forward with a plan to cater part of its seating to higher-paying premium travelers. "We were highly impacted on the demand side by the tariffs and the consumer confidence erosion," Jordan told Yahoo Finance. With consumers holding an average credit card balance of $6,380 per month, it's no wonder consumer sentiment has tumbled to its lowest level since 2022. 'Over 60% of Americans are living paycheck to paycheck," said Jeff Mandel, president of monetization at IDIQ, a firm that works with individuals on their personal finances and credit. 'This is one of the scariest times that I think we've ever seen." Bank of America's credit card research shows "nice-to-have" discretionary services, such as dining out, going to the movies, or travel and leisure spending, eased in March, with the biggest pullback among the low-income households. However, Wall Street doesn't appear too concerned yet. That's because signs of an economic slowdown have yet to fully emerge in labor market data. Economists expect that trend to continue with the release of the April jobs report on Friday. "If that shoe drops, then that's when we would really start to get worried," said Bank of America Institute's Tinsley. Ines Ferre is a Senior Business Reporter for Yahoo Finance. Follow her on X at @ines_ferre. Click here for in-depth analysis of the latest stock market news and events moving stock prices Sign in to access your portfolio
Yahoo
28-04-2025
- Business
- Yahoo
Why consumers are 'still spending' despite economic uncertainty
Consumers appeared to rush major purchases in March and April, possibly buying ahead to brace for tariff impacts, according to data from Bank of America. Bank of America Institute senior economist David Tinsley joins Asking for a Trend to break down the data, highlighting how shoppers may be pulling forward purchases amid tariff uncertainty. To watch more expert insights and analysis on the latest market action, check out more Asking for a Trend here.
