Core Insights - Bank of America Institute's consumer checkpoint for October indicates a 2% year-over-year increase in debit and credit card spending, marking the largest increase since December 2024 [1] - The data reveals a divergence in spending growth between higher and lower income households, with lower income households increasing spending by 6.1% and higher income households by 2.6% [5][6] Spending Trends - Overall consumer spending is on an upward trend, driven primarily by services and gas, while retail spending has decreased slightly by 0.2% [2][4] - The analysis is based on actual spending data from nearly 70 million consumers, rather than survey responses, providing a close to real-time view of consumer behavior [4] Income Disparities - Spending growth is significantly higher among higher income households compared to lower income households, highlighting a "tale of two cities" in consumer spending [5][6] - Higher income households experienced a wage growth of 4% in September, the highest in four years, while lower income households saw a modest increase of 1.4% [10][11][12] Labor Market Insights - The labor market shows signs of fatigue, with payroll growth in September at just 0.5%, down from 1.7% at the beginning of the year and nearly 4% two years ago [9][10] - Despite the slowdown in employment growth, wages for employed households are increasing, particularly among higher income groups, which supports their spending [10][12] Market Influence - Higher income consumers are benefiting from wealth effects due to rising stock and housing markets, which in turn supports discretionary spending [12] - The data suggests that while the labor market is growing, it is doing so at a slower pace, yet higher income consumers continue to drive spending [14]