Consumers Shift Spending to Value Merchants
Bank of America Institute data shows U.S. households trading down as the Spending Tier Composite hits its lowest level since 2021.
Updated on Nov. 10, 2026 in Spending
Live Poll
Are you cutting back on clothing or dining out because of rising prices?
Bank of America Institute analysts report that U.S. consumers are shifting spending toward value-tier merchants. Its Spending Tier Composite, built from deposit account and card spending data, has reached its lowest level since 2021.
Why it matters
The trade-down trend signals that households are tightening budgets, with apparel and groceries showing the clearest shifts toward cheaper options. It reflects how price pressures are changing everyday purchasing decisions across the country.
The Spending Tier Composite, built from deposit account and card spending data, reached its lowest level since 2021, with apparel recording the largest share-to-total decline among tracked categories. The source does not state how long the trade-down trend will persist.
The players
Bank of America Institute
The research arm of Bank of America that publishes economic analysis drawing on the bank's anonymized deposit and card transaction data.
The details
Analysts identified apparel, dining, and groceries as categories where spending has moved toward lower-priced options, while hotel and cruise demand has rebounded. Apparel inflation has run closer to wage growth than grocery or dining inflation in recent months, and Millennials' spending tier has fallen faster since 2022 than older generations.
Timeline
Since 2021: Spending Tier Composite falls to its lowest level.
2021 and 2022: Apparel prices accelerate while apparel share declines.
Since 2022: Millennials' spending tier falls faster than Gen X or Baby Boomers.
Macro View
The Bank of America Institute's Spending Tier Composite is the source's measure of trade-down behavior, and its latest reading marks the lowest level since 2021. The shift follows a multi-year decline in apparel's share of total consumption.
Households trading down to cheaper apparel, groceries, and dining options may be feeling tighter budgets as prices outpace some spending categories. Apparel inflation running closer to wage growth means clothing purchases take a larger share of take-home pay.
The takeaway
Comparing store brands and waiting for seasonal apparel sales can help offset rising costs in categories where prices are climbing fastest. Tracking your own spending mix each month can show where trade-down choices could stretch your budget further.
Further reading
For more on how households are adjusting their budgets, explore Spending coverage.
Source note: This article includes information reported by WWD.
Live Poll
Are you cutting back on clothing or dining out because of rising prices?
