Bank of America says lower-income spending is narrowing the “consumer gap” seen earlier this cycle

Bank of America is pointing to credit and debit card data that it says shows a change in U.S. consumer spending patterns, specifically that lower-income households are beginning to close what it had described as a consumer gap versus higher-income groups. The bank’s comments, reported by Yahoo Finance, frame the move as evidence that the previously emphasized split in consumption behavior may be moderating rather than widening.

In the earlier “K-shaped” narrative, spending often appeared to diverge across income groups, with higher-income consumers more resilient while lower-income households faced greater financial pressure. Bank of America’s latest read, as characterized in the report, centers on whether that divergence is shrinking, using card data as the primary lens for tracking transaction behavior over time.

The bank’s analysis focuses on how spending growth or spending levels differ across income cohorts, and it attributes the narrowing gap to improving momentum among lower-income customers. While the broader consumer story remains complex, the message from Bank of America is that the distance between the two consumer segments is decreasing, which would imply a more synchronized national demand picture than investors have sometimes expected.

The framing matters for markets because consumer spending is a key driver for U.S. economic growth and for corporate earnings across retailers, consumer services, and travel-related businesses. When banks and analysts see narrowing gaps, it can suggest fewer demand headwinds for lower-end discretionary categories and potentially less unevenness in revenue performance across companies that sell to different customer segments.

Bank of America did not, in the Yahoo Finance write-up, provide specific figures such as the magnitude of the gap change, the precise time window used, or detailed breakdowns by category or geography. It also did not spell out whether the bank’s conclusion is based on year-over-year comparisons, sequential trends, or a particular index of spend that it follows internally.

It is also unclear from the report how much of the shift is attributable to changes in prices versus changes in quantities. In consumer-data discussions, narrowing “gaps” can sometimes reflect cost and inflation dynamics as much as it reflects improved household purchasing power, particularly for categories where essentials and recurring bills dominate.

Still, the bank’s emphasis on lower-income spending catching up is consistent with a market question that has been persistent: are consumer resilience and labor-market strength translating broadly across households, or staying concentrated among those with more buffer? If the trend persists, it would support the idea that demand is less bifurcated, even if overall spending remains uneven by category.

Looking ahead, investors are likely to watch whether the narrowing is sustained in subsequent card data and whether it shows up in other real-economy indicators, such as retail sales breadth, unemployment and wage trends, and company commentary on traffic from value-focused customers. Bank of America’s next updates, if they include more detail on timeframes and segment definitions, could help determine whether the shift is a durable rerating of the consumer story or a temporary inflection.