LIVE MARKETS-Spending slowdown hits younger generation

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SPENDING SLOWDOWN HITS YOUNGER GENERATION

U.S. spending growth remains relatively soft among younger consumers, according to the latest "Consumer Checkpoint" from the Bank of America Institute.

Gen X's spending growth per household was the weakest, gaining just 0.1% year-over-year in August, significantly below 2.4% increase seen among Baby Boomers an traditionalists, and even a little softer than the 0.5% rise in Gen Z and Millennial households, according to the report dated September 9.

Gen X might not be the biggest generation by household count, but they’re leading the charge when it comes to spending, accounting for 27% of total consumer spending in 2023, the report said, citing data from the Bureau of Labor Statistics (BLS).

"The weakening labor market appears to be impacting younger people, particularly because changing jobs no longer results in as big of a pay bump," economists at Bank of America Institute wrote.

Data last week showed U.S. consumer prices increased by the most in seven months in August amid higher costs for housing and food, while another series of data pointed to softening labor market conditions.

"Some relief for the younger generations could come from easing housing costs," economists added.

Falling yields can potentially bring down mortgage rates, making homes more affordable. The Federal Reserve is widely expected to resume cutting rates this week.

Total credit and debit card spending per household increased 1.7% year-over-year in August, after a gain of 1.8% in July, according to Bank of America aggregated card data.

By income bracket, lower-income households showed a considerably weaker spending growth, with just a 0.3% year-over-year increase in August. In contrast, higher-income households saw a 2.2% gain.

(Medha Singh)

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