LIVE MARKETS-Top earners spending more while lower incomes more selective

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TOP EARNERS SPENDING MORE WHILE LOWER INCOMES MORE SELECTIVE

Shopping trends point to still strong consumer spending, with a 5% year on year increase in purchases of holiday items, and a recent cool off around Black Friday and Cyber Monday likely due to early and online spending, rather than shoppers pulling back, according to the Bank of America Institute.

Holiday spending nonetheless shows signs of a “K-shaped” trend, as does total card spending, Liz Everett Krisberg. head of Bank of America Institute and David Michael Tinsley senior economist at the firm said in a report.

“Spending growth for holiday items has been stronger among higher-income households, while lower-income households are seeing more modest gains. Slower wage growth and cost-of-living pressures are part of the story, but overall, shoppers across the board are still finding ways to spend.”

The analysts point out in a separate report that higher income households are also behind growth in discretionary spending.

Entertainment is seeing the most growth, with all income groups above $100K increasing their spending in the category and the largest increase coming from the $125K-$150K bracket. Top earners are also spending more on clothing, airlines and hotels.

Lower income groups, meanwhile, saw stronger pullbacks in travel and clothing, “underscoring the growing gap in income groups’ economic experiences.”

(Karen Brettell)

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