While the economy added a better-than-expected 311,000 jobs in February, credit- and debit-card data from Bank of America shows people kept on spending at a strong clip during the month. Consumers’ willingness to spend is closely tied to their employment situation, and a person who’s out of work or worried about their job prospects are obviously more likely to cut back on their spending.
So what’s going on? The February jobs report on Friday comes after a major 504,000 addition to payrolls in January, revised back from 517,000 jobs. And that’s even with the steady drumbeat of more tech sector layoffs. Some observers wonder how much longer the labor market can keep it up. But if consumer spending habits offer any clue, data from the Bank of America Institute might suggest there’s still room to go. Compared to a year ago, consumer credit- and debit-card spending in February increased 2.7% year over year. That’s down from January’s 5.1% year-over-year growth in spending, but the Bank of America Institute researchers said the numbers suggest consumer pending is still holding up. There is strain, like signs that lower-income households have been relying more on their savings, researchers said. Still, “the strength of the labor market has allowed U.S. consumers to largely ride through inflationary pressures.” “Strong labor markets” are boosting consumer spending and any impact from tech-sector job cuts is “modest,” researchers wrote in a Thursday report. Read also: Retail sales surge 3% at start of 2023 in clear sign the economy is still growing The backdrop is the very visible layoffs in a list of companies that includes Twilio
Zoom Video Communications