Bank of America: The Biggest Part of the U.S. Economy Might Be Rolling Over

Uh oh.

Is U.S. Consumer Spending Weakening?

The U.S. consumer might have gone AWOL in March.

Bank of America Corp.'s proprietary aggregated credit and debit card data suggests that retail sales excluding cars flatlined last month.

"Given difficult annual comparisons, this leaves sales down 0.1 percent year-over-year," writes Deputy Head of U.S. Economics Michelle Meyer.

Lower-income households, which spend a disproportionately higher amount of their take-home pay on fuel, have been registering better annual retail sales growth excluding autos and gas than richer households as oil prices started falling in 2014.

Disconcertingly, this gasoline dividend might have been fully paid.

"In the past few months, spending for the low-end consumer has slowed, falling back below the growth rate of the high-end cohort," notes Meyer.

BAML GAS
Source; Bank of America Merrill Lynch

Without growth from the U.S. consumer, the largest segment of the economy, the American expansion has rather precarious support.

During an interview on What'd You Miss, Bloomberg's Matthew Boesler noted that excluding autos and gas, retail sales have been growing at a solid clip, underscoring the broad-based resilience of the U.S. consumer to date. Auto sales weakened in March on an annual basis, said Boesler, and if other components followed suit, this would jeopardize the Federal Reserve's outlook for the U.S. economy. 

Retail sales for March are slated to be released on Wednesday, with economists expecting sales to advance by 0.3 percent month-over-month excluding autos and gasoline.

In February, retail sales including those two items declined on a monthly basis and January's print, initially recorded as an advance of 0.2 percent, was revised into negative territory.

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