Read our full analysis for a more in-depth look at these trends.
The cost of living ain’t easy
Consumer resilience continues, but cost-of-living increases, slowing wage growth and unemployment fears are a headwind for some.
March 2025
Key takeaways
- The cost of living keeps getting costlier. Consumers are paying more for some of their largest expenses like housing, insurance, car payments, and utilities, according to Bank of America payments data. But a recent decline in gasoline prices and trading down on groceries may be offsetting this trend.
- Consumers have not been able to offset all of these costs, and the share of spending on more discretionary items like electronics, restaurants, and travel has declined across all income cohorts in the past two years, but especially for lower-income customers, according to Bank of America payments data. However, the decline in discretionary spending share has slowed significantly in the past year for all income groups.
- While the strong labor market is likely responsible for some of this improvement, rising unemployment over the past year and the fear of further job losses may affect consumer spending, especially on more discretionary items.
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