BofA says K-shaped consumer spending gap has closed

Investing.com -- Bank of America reports that lower-income households now show slightly stronger year-over-year card spending growth than higher-income households, marking a reversal of the K-shaped spending pattern that persisted for over a year.

The shift became visible in the last two weeks, according to BofA's aggregated credit and debit card data for spending excluding gas purchases.

The bank identifies three factors behind the change. Lower-income households demonstrate greater sensitivity to labor income, which likely benefited from increased job growth or reduced tax withholdings following OBBBA changes. Gas prices dropped substantially in June, though they have since risen again. Lower-income households allocate a larger portion of their income to gas purchases.

Base effects also contributed to the reversal. The spending gap between higher-income and lower-income households widened significantly in June 2025, creating favorable conditions for the gap to narrow and then reverse during June and July of this year.

Tuesday's economic data releases include ADP weekly jobs figures, June advance goods trade numbers, June inventories, May home price indices, and July consumer confidence.

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