Consumers Are Finally Feeling the Pain of Inflation

　　Consumers are starting to feel the pinch of inflation as their spending slows down.

　　In a given year, Bank of America customers spend $4 trillion dollars—be it using a debit or credit card, writing a check, confirming a bank transfer, or taking cash out to spend.

　　From 2021 to 2022 that spend grew by 10%, Moynihan said, and began dropping to 9% in the first quarter of 2023.

　　Now that growth figure has dropped to 4.5%, he added, signaling consumers are either too nervous to spend the money they have, or have less in their pandemic-boosted savings accounts to sustain their spending levels.

　　Lower-income homes are impacted more. Moynihan went on to support an observation made by Citigroup CEO Jane Fraser, who said "cracks" are beginning to show in consumer spending, particularly by lower-end consumers.

　　Fraser said that while Citi's data shows consumer spending is still "good" and is in positive figures, the growth has begun to "come off," explaining to CNBC that in September numbers, "the softening of the growth in demand, is…evident."

　　Savings are down for lower-end consumers, Fraser added: "They're very low at the moment, and I think some of the excess savings from the COVID years are close to depletion."

　　Moynihan said that Bank of America has found similar trends. He said median-income households have lower account balances and are spending down their pandemic war chests.

　　Higher-income households have similarly moved their money out of checking accounts, but have instead moved their fortunes into investments.

　　Is the Fed's plan working? If the so-called YOLO (you only live once) spenders have indeed run dry and the economy is inching back, as Moynihan says, to low growth—then has the Fed's plan really paid off?

　　The first priority of the Fed was to tackle inflation—which has indeed come down. In September 2023, inflation sat at 3.7%, down from 8.3% a year prior.

　　Economists seem largely satisfied by this effort—though many have warned the most difficult part of bringing inflation down lies ahead.

　　Treasury Secretary Janet Yellen remarked inflation is being "really well behaved," while Wharton professor Jeremy Siegel believes rates will hold steady in November.

　　Despite this, professor Siegel wrote: "We're poised for a year-end rally in equities and a good year for 2024."

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