Just days ahead of the official US jobs report, data from the Bank of America Institute provides a less degraded view of the US economy, though it stops short of confirming a uniformly solid consumer base. According to its customers' deposit accounts, growth in wages paid accelerated in April to 1.9% y-o-y on a three-month moving average, up from 1.4% in March, marking the highest pace in two and a half years. This momentum contrasts with the Bureau of Labor Statistics (BLS) and Automatic Data Processing (ADP) series, which have remained much weaker, suggesting a decoupling between near-real-time banking data and more traditional indicators.
This reading must be nuanced, however, as Bank of America specifies that its series is not seasonally adjusted and relies on a specific client base. Nevertheless, the signal remains significant for markets, as the growth of unemployment benefit payments received in customer accounts slowed to 7.4% y-o-y in April. In other words, the bank's data does not describe a clear deterioration of the labor market, despite the geopolitical shock in the Middle East and the surge in energy prices. This resilience is not homogeneous, as small businesses recorded a decline in payroll payments in March for the third consecutive month.
On the consumption side, the diagnosis appears more ambivalent. The report published in late April shows that rising gasoline prices already weighed on households in March, with card spending at gas stations up 16.5% month-on-month. The average US household allocated approximately 3.1% of its income to gasoline, compared to 2.8% a year earlier, but the burden reached 4.2% for the lowest-income households, versus 2.7% for the wealthiest.
Consumption does not appear broken, notably because deposit balances remain above their 2019 levels, including for households earning less than $50,000 per year. However, this resilience increasingly depends on savings cushions, tax refunds, and high-income households, whose after-tax wages grew by 6.0% y-o-y in April, compared to only 1.5% for the lowest-income households.
This combination depicts a US economy that is still robust on the surface but more asymmetric underneath. For the Federal Reserve, the message is uncomfortable, as employment does not clearly argue for rapid easing, while consumption is becoming more vulnerable to the spillover of the energy shock into food, essential services, or utility bills.
