00:00:04.812 Speaker A

We're coming up on the official start to summer, and new data from Bank of America is signaling a potential slowdown in consumer activity. Seasonally adjusted credit and debit card spending per household declined by 0.7% in May from the prior month. The firm sites a few factors, declining gas spending, payback from tariff driven stock piling earlier in the year, and even poor weather in some regions. But the question remains, could this be a sign of weakening consumer sentiment? Joining me now on set is Mary Hines Drose. She's the head of Consumer Products at Bank of America. So, Mary, thank you so much for being in studio today. We're seeing this spending drop. How significant is that in the context of recent trends?

00:00:57.582 Mary Hines Drose

Yeah, it's the first time we've seen a contraction in seasonally adjusted spend in a long time. But when you decompose what's driving it, it's okay. We shouldn't get worried yet. Because really gas prices going down, the transactions are still the same. It's just costing them less. We also saw during the tariff announcements in April, a lot of people accelerated their spend for certain things like electronics. So April we saw 7.5% increase in electronic purchases, and May is down 1%. So that's because it's just a pull forward, not because the consumer is weakening. And we're in New York. Every weekend it has rained. Yes. So we don't have the normal summer activity happening, which is also a driver of why spend is a little weak.

00:02:14.772 Speaker A

And what categories has spend been the weakest in? Is it mostly that discretionary spending, or are we seeing a pullback in any essentials as well?

00:02:26.492 Mary Hines Drose

Well, there's it's more the um discretionary because essentials are more expensive. So overall this year, we've seen higher insurance, utilities, taxes. So therefore, you've got to say, well, what am I going to spend less on? So instead of restaurants, doing more groceries, instead of high-end groceries, you go discount. So you're really making choices in order to manage some of those things that are just simply more expensive.

00:03:05.102 Speaker A

So how does this illustrate this more cautious tone that we've been hearing from the consumer? Obviously, a lot has happened since those tariff announcements were announced in April, and we've seen various sentiment survey data come out and be very pessimistic. But recently, that's been the opposite. There's seems to be a little more optimism out there. What what do you guys see?

00:03:37.602 Mary Hines Drose

Yeah, we definitely saw a bounce back in consumer sentiment in May from April, um which is expected, right? There's been some trade deals. There's been less of a certainty that things are going to get more expensive. And so consumers are feeling pretty good, but life has gotten more expensive, so they're they're still traveling, they're just doing it in a more affordable way.

00:04:13.432 Speaker A

So adjusting to a new normal of sorts. Exactly. And we were just talking about on the break about how you guys have seen a lot of retail trading activity. Tell me about that when it comes to buying the dip and new investors coming into space.

00:04:33.312 Mary Hines Drose

Yeah. Well, what's interesting is we're seeing younger generations be much more interested in retail investing. And we have a Merrill Edge, a self-directed platform, um which enables people to really take advantage of some of those opportunities, which yeah, it's kind of just an interesting phenomenon with the comfort level.

00:05:04.362 Speaker A

Yeah, very interesting marker right now. You mentioned the summer season spending trends there. What are you seeing in terms of the dispersion between higher income consumer, lower income consumer? Where are people spending, if they are at all?

00:05:24.052 Mary Hines Drose

Yeah. Well, higher income consumers really fuel the economy because they spend the most. Um but they're just making more choices, and they have more flexibility than younger ones. When you look at the younger consumers, they're having to face child care costs. They don't necessarily own their home, rents have become more expensive. And so they're more impacted by some of the dynamics that's going on in the marketplace.

00:06:14.172 Speaker A

And talk to me about destination dupes. What is that? Why are we seeing that being a shift?

00:06:23.502 Mary Hines Drose

Yeah. This is really interesting. We did Bank of America did a summer travel survey, and 92% of those we surveyed said they were interested in destination dupes. And this is where you have a place that you'd like to go. I'll use an example that I did personally, Santorini in Greece. Santorini is really, really popular, so it's super crowded, super expensive, and a lot of people have been there. A dupe for that is to go to Paros. It's less well-known, much less expensive. I was able to get a much better hotel than I could in Santorini at a fraction of the cost, and I've done something unique so I can post it on social media. Mhm. Yeah, we love that.

00:07:52.522 Mary Hines Drose

And you've seen a lot of the media around places like Venice and Barcelona, where even the locals are so tired of all the tourists. It's not creating a great experience. So this is just another way to have a really memorable vacation, lower cost, and more unique.

00:08:17.662 Speaker A

I was just in Greece. I I have to go back now with with this dupe location. Amazing. So we're also seeing the entertainment economy continue to chug along here. We know live events, sports, it's been driving a lot of the economy. So BofA had cardholders spending $1.5 billion over the last year in entertainment. Where exactly are they putting those dollars?

00:08:50.252 Mary Hines Drose

Yeah, it's interesting in that when we did our summer travel survey, we found that um 50% of the people that we surveyed had traveled for a live event in the last two years. And in 2025, a third of them said they want to spend even more doing that. And that just goes back to the post-COVID desire for experiences. And people just love being there in the moment, and it creates such a memory. And there that's where a lot of the discretionary spend is going. And it is expensive. Concerts, amusement parks, a lot of live things are just really pricey.

00:09:42.062 Speaker A

Yeah, I just saw Beyonce, so I'm well aware of the expense there. Uh but it you're right, totally worth it and a really fun experience and a good memory. Mary, thank you so much for your insights. Appreciate it.

00:09:56.052 Mary Hines Drose

Great. Thanks for having me.