Consumer Spending Is Holding Up, but the Cushion Is Uneven

U.S. consumers kept spending in May, and Bank of America data show wage gains improving for lower- and middle-income households. That helps Main Street businesses because demand has not cracked, but the same data point to a careful kind of resilience: shoppers are still buying, while some are making more trips in search of better prices.

Bank of America's June Consumer Checkpoint, dated June 11 and highlighted in fresh market coverage this week, said total credit and debit card spending per household rose 5.1% from a year earlier in May, the strongest growth in nearly four years. Excluding gasoline, spending still rose 3.9%, which matters because it suggests the increase was not only drivers paying more at the pump.

The practical takeaway is not that households suddenly feel comfortable. It is that demand remains usable for retailers, restaurants and service businesses, while families still appear price-sensitive. Bank of America said transactions at general merchandise stores picked up without spending rising proportionally, a pattern it said may suggest bargain hunting.

Why this is useful for Main Street businesses

For local retailers, restaurants, personal-service firms and small vendors, the Bank of America data offer a demand signal at a tense point in the year. Spending growth was not only about gasoline. The report said retail excluding gasoline and restaurants contributed nearly as much to overall spending growth as services including restaurants, the first time that had happened since February 2021.

That does not mean every store has pricing power. The more useful reading is that customers are still active, but they may be choosier. A business that depends on repeat visits, clear discounts, smaller-ticket purchases or visible value may be better positioned than one assuming shoppers will absorb every price increase without changing behavior.

This is the second-layer insight: resilient spending can coexist with anxious households. People may continue buying because wages, tax refunds and deposit balances give them room, while still feeling squeezed by rent, insurance, gasoline and groceries. For Main Street, that means the customer is present, but the sale may require sharper value and cleaner pricing.

The wage signal is better, but not equal

Bank of America said the spending and wage-growth gaps across income groups narrowed in May. Lower-income card spending rose 4.1% from a year earlier, middle-income spending rose 4.3%, and higher-income spending rose 5.4%. The report also said after-tax wage growth improved to 3.1% for lower-income households and 3.5% for middle-income households, while higher-income wage growth slowed to 5.6%.

Official labor data are broadly consistent with a still-working income base. The Bureau of Labor Statistics said employers added 172,000 jobs in May and average hourly earnings for all private nonfarm employees rose 3.4% over the year. That supports the idea that paychecks are still helping spending, even if the Bank of America income-cohort details come from the bank's own customer base rather than a government survey.

There is an important caveat in the Bank of America report itself. The institute said some improvement in lower-income job momentum could reflect service-sector hiring ahead of the 2026 FIFA World Cup, so the strength may not carry through the rest of the year at the same pace. A temporary summer lift is still useful, but it is different from a durable broad-based wage acceleration.

Why households should read the good news cautiously

The strongest reason to stay careful is savings. The Bureau of Economic Analysis said the personal saving rate fell to 2.6% in April, its lowest level since June 2022. Bank of America added a more reassuring detail: among its customers, household savings and checking balances remained significantly higher than in 2019, even after inflation, and tax-refund season lifted deposits more in 2026 than in 2025.

Both points can be true. Households may still have more cash cushion than they did before the pandemic, but the monthly saving rate suggests many are not adding to that cushion quickly. For readers, the practical move is to treat stronger spending data as a sign of economic stability, not as permission to rebuild budgets around permanent comfort.

Sentiment data tell the same cautious story. The University of Michigan's preliminary June reading rose to 48.9 from 44.8 in May, helped by some easing in gasoline pressure, but the index remained far below its June 2025 level. In plain terms, people were a bit less gloomy, not broadly confident.

What to watch next

The first checkpoint is the Census Bureau's May retail-sales report, scheduled for June 17. Census data are not adjusted for inflation, but they provide an official cross-check on whether the May spending strength in bank-card data shows up across the broader retail economy. The April Census release had shown retail and food-services sales up 0.5% from March and 4.9% from a year earlier.

The second checkpoint is whether lower- and middle-income wage growth keeps improving after summer event hiring fades. The third is the next BEA personal income and outlays report, because a stable spending story looks healthier when it is funded by income growth rather than by thinner savings or higher minimum card payments.

For now, the calm read is this: households are still participating in the economy, and that is good news for Main Street. The limit is that participation still looks careful, uneven and sensitive to prices, so businesses and families should plan around steady demand rather than easy demand.