Bank of America Reports Rising US Consumer Spending
The bank forecasts two additional Federal Reserve interest rate hikes by year-end 2026 amid resilient economic growth.
Updated on Oct. 19, 2026 in Spending
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Bank of America economists estimate Q3 economic growth at a 3.6% annualized pace, driven by consumer spending. Inflation-adjusted spending remains steady at a 3.5% annualized rate.
Why it matters
Resilient economic growth, steady hiring, and high inflation are prompting expectations that the Federal Reserve will implement two more quarter-point interest rate hikes to stabilize the economy.
Weekly household card spending rose 5.1% as of October 10, with gas station outlays surging 25.1% while department store sales fell 5.1%. September annual inflation hit 3.7%.
The players
Bank of America
This multinational investment bank and financial services holding company provides economic analysis and consumer spending metrics based on internal transaction data.
Federal Reserve
The central banking system of the United States is responsible for conducting monetary policy, including setting interest rates to manage inflation and economic growth.
The details
While lower-income households saw 4.5% year-over-year after-tax wage growth in September, the overall debt-payment-to-income ratio has climbed to 11.9%. Online retail spending also showed resilience with a 7.7% increase.
Timeline
September 2026: Lower-income households experienced 4.5% year-over-year after-tax wage growth.
October 10, 2026: The reported week for household card spending data concluded.
October 16, 2026: Bank of America published its US Economic Weekly report.
October 27-28, 2026: The Federal Reserve is scheduled to meet.
December 2026: Analysts anticipate a second quarter-point interest rate hike.
Market Dynamics
This forecast for the Federal Reserve's target interest rate range, expected to reach 4.25% to 4.50%, reflects the bank's outlook on the broader macroeconomic cycle. These projections suggest that monetary policy will remain restrictive through 2027 to combat persistent inflation.
Consumers should prepare for potentially higher borrowing costs as interest rates are expected to rise. This environment may necessitate adjustments to household debt management strategies and personal savings allocations.
The takeaway
Economic growth remains surprisingly resilient, but the rising debt-payment-to-income ratio suggests households are increasingly stretched. Monitoring personal debt levels and preparing for a higher interest rate environment are essential steps for financial planning.
What happens next
The Federal Reserve is scheduled to hold a meeting on October 27-28, 2026, where officials will discuss the target interest rate range.
Further reading
For more context on current household trends, see the United States Spending section.
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