Consumer Spending, Payrolls, and Wage Growth

Data out this past week is showing consumer spending coming in steady to start the year. Both government (BAE) and private data (BofA) show consumer spending steady to up for early 2026. BAE data for January (released Friday) showed Inflation-adjusted consumer spending increased 0.1% (government data continues to be on a lag due to the shutdown in late 2025). Bank of America data for the month of February released last week shows debit card and credit card spending up 3.2% year-over-year, the highest pace in over three years. On a seasonally-adjusted basis, spending also looked bright, rising 0.9% month-over-month.

Payroll data has come in mixed. Nonfarm payrolls fell 92,000 last month according to the Bureau of Labor Statistics, one of the largest declines since the pandemic, after a strong start to the year (positive 130,000 in January). The 4-week average of initial unemployment claims continues to hold steady in a range between 200K-240K.

Compare this to Bank of America data released last week showing payroll growth accelerated to 1.3% year-over-year in February. BofA data also showed that the growth in the number of households receiving unemployment benefits has flattened out. Overall, BofA data is pointing to a strengthening labor market in the early months of 2026.

Wage data for January from BAE showed personal income/wage growth of +.4%. Private data from Bank of America showed higher-income wage growth rose to 4.2% YoY in February, lower- and middle-income wage growth slowed, to 0.6% and 1.2% YoY, respectively.