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Data culled from Bank of America’s credit cards, debit cards and customer accounts show that retail spending as well as wages accelerated in March.
That’s welcome news if confirmed by national data, given the slow start to the year for spending.
According to a research note from Bank of America Merrill Lynch, retail sales excluding autos accelerated in March, particularly for households earning under $50,000. The 0.6% seasonally adjusted monthly rise was the strongest since November. As pointed out at the time, the delay in refunds from the Earned Income Tax Credit and the Additional Child Tax Credit hampered spending at the beginning of the year.
Not only has that headwind abated, after-tax wages and salaries are trending higher after the passage of the Tax Cuts and Jobs Act. What Bank of America calls its “wage proxy” — which is based on payroll direct deposit data — after-tax wages grew 7.5% year-over-year in March, up from 5.2% in February.
That’s because the new tax withholding tables have gone into effect, which has translated into higher pay.
Spending growth may have been even stronger were it not for snowstorms — New York, Massachusetts and Vermont growth was weaker than the national gain.
By category, sporting goods enjoyed a strong month, with discount apparel, food and beverage and clothing also rising. Travel spending — on cruises in particular — also grew, while the inclement weather weighed on gasoline stations and home improvement stores.