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BofA Data Finds that 2022 was a Solid Year for Consumer Spending, But the New Year Brings New Challenges

Bank of America Newsroom

Despite cross-currents from such potential factors as a weaker job market, easing inflation, and a rising cost of living, consumers’ New Year’s resolutions to get healthier may also heat up changes in spending habits

Bank of America Institute released new analysis today which shows that, while 2022 was a solid year for consumer spending, the New Year brings with it cross-currents for U.S. consumers, including a potentially weaker job market and easing inflation pressures in 2023. Although January and February are typically lighter months, New Year resolutions to get healthy may provide some support for spending.

BofA aggregated credit and debit card data indicates 2022 was a strong year for consumer spending, with total card spending per household up 5.9% year-over-year (YoY).

There was a stark difference, however, between retail/goods spending and non-retail spending (which includes services such as travel and entertainment); average YoY spending growth for retail in 2022 was 3.7% compared to a much stronger 10% in services.

2023 starts with consumers still facing higher living costs, especially utilities, partially driven by a colder December in 2022 than the prior year. BofA internal data shows that the average utility payment per customer increased 13% YoY in December, even as natural gas prices have dropped by more than 50% since the peak price levels in August 2022. And while the labor market remains tight, there are signs of wage growth moderation. According to BofA internal data, consumer after-tax wages decelerated to 2.7% YoY (3-month moving average) in December, from the high of 8% in April 2022.

With these trends in mind, a new year often signals a fresh start and good intentions, illustrated by an uptick in web searches for “gym memberships” each January. BofA internal data shows that between 2010 and 2019, credit and debit card spending per household at fitness clubs surged in January of each year, after relatively low levels during the winter holiday months. However, as of December 2022, card spending per household at fitness clubs remained 35% lower than pre-pandemic levels. Part of this weakness could be due to the rise of in-home fitness, which gained popularity since the pandemic because of migration out of city centers and a preference for social distancing, especially among older generations.