American households increased their total card spending by 4.5% year-over-year in August while actively redirecting where those dollars land, with general merchandise and big-box retailers outperforming traditional retail channels during the 2026 back-to-school season, according to the Bank of America Institute’s September Consumer Checkpoint report. The data, drawn from aggregated and anonymized credit and debit card transactions, paints a consumer who is still spending but making deliberate choices about value, timing, and category. Total card spending per household rose 0.9% month-over-month in August, supported by discretionary services that continue to provide a steady growth foundation even as some individual categories moderate.
Key Takeaways
- Total card spending per household rose 0.9% month-over-month and 4.5% year-over-year in August, according to Bank of America aggregated card data
- General merchandise and big-box retailers outperformed traditional retailers during back-to-school season, indicating active value-seeking among consumers
- Spending and wage growth have “largely converged” across income groups, though Millennials show the largest remaining generational K-shaped divergence
- Credit card utilization declined across most age and income cohorts, suggesting households are managing revolving debt while maintaining spending levels
- Lower- and middle-income households hold deposit balances above pre-pandemic norms across all age groups
- The National Retail Federation projected total back-to-school spending at $146.8 billion for 2026, with K-12 spending reaching a record $43.3 billion, up from $39.4 billion in 2025
Value-Seeking Behavior Accelerated During Back-to-School Shopping
The shift toward big-box and general merchandise retailers is not new, but the September Consumer Checkpoint identifies it as a trend that gained momentum specifically during back-to-school purchasing. The Bank of America Institute’s analysis found that consumers are “actively seeking lower-cost alternatives while maintaining spending,” a pattern that suggests households are not cutting back on purchases but are rerouting them toward channels that offer more competitive pricing on comparable products.
That behavioral shift aligns with what the National Retail Federation documented in its own back-to-school survey data throughout the summer. NRF’s annual survey, conducted with Prosper Insights & Analytics among 7,677 consumers between July 1 and 8, projected total K-12 back-to-school spending at $43.3 billion for 2026, up 9.89% from $39.4 billion in 2025. The average K-12 household planned to spend $863.86, a slight increase from $858.07 the prior year. Combined with college spending of $103.5 billion, total back-to-school spending reached a projected $146.8 billion.
What the NRF data showed beneath those record numbers, however, was a consumer making the same purchases while working harder to find the price point. Seventy-eight percent of shoppers expected to see higher prices on back-to-school items in 2026, down from 84% who held the same expectation in 2022 but still a clear majority. Among respondents who found items priced above expectations, the primary response was comparative shopping and trading down to discount retailers rather than reducing the total amount purchased. Forty-six percent planned to wait for sales to finish their lists, and 47% intended to buy only essentials at the start of the school year and replenish later.
Income Groups Are Converging, But a Generational Split Persists Among Millennials
One of the more notable findings in the September Consumer Checkpoint is the convergence in spending and wage growth across income brackets. For more than a year, the Bank of America Institute had been tracking a K-shaped economy in which higher-income households drove the majority of spending growth while lower-income households faced disproportionate affordability pressure. That gap has narrowed. The September report describes spending and wage growth as having “largely converged” across income groups, a shift from earlier in the year when the divergence was widening.
The convergence does not mean all households are in the same financial position. It means the rate of change in spending and earnings has become more uniform, which reduces the gap between groups in terms of directional trajectory even if absolute levels remain different. The distinction matters because convergence in growth rates can occur while absolute spending power and savings buffers remain unequal.
Within that broader convergence, the report identifies one demographic where the K-shaped pattern persists: Millennials. The generation, now roughly 30 to 44 years old, shows the largest internal divergence in spending behavior of any age cohort. This tracks with what the Bank of America Institute has documented over the past several months: Millennials span a wide range of financial circumstances, from dual-income homeowners with meaningful equity gains to renters managing student loan payments alongside childcare costs. That dispersion within a single generation creates a data pattern in which the average obscures the lived experience on either side. The dynamics mirror a broader economic divergence that analysts have been tracking throughout 2026 as wealthier households sustain spending growth while lower-income households adopt more cautious strategies.
Household Balance Sheets Show Resilience Despite Elevated Consumer Prices
The Consumer Checkpoint’s assessment of household financial health points to conditions that support continued spending through the fourth quarter. Credit card utilization declined across most age and income cohorts in August, a signal that households are managing revolving debt rather than leaning on credit to sustain purchases. Declining utilization during a period of rising spending suggests that income growth, not borrowing, is financing the bulk of consumer activity.
Lower- and middle-income households still hold deposit balances above pre-pandemic norms across all age groups, according to the Bank of America data. That finding is consistent with what the institute has reported since early 2026, when larger-than-expected tax refunds under the Working Families Tax Cut Act boosted savings balances across income brackets. The persistence of those elevated balances into September suggests that households have not fully drawn down the refund-driven cushion, providing a buffer that could support spending into the holiday season.
The combination of declining credit utilization and elevated deposits supports the report’s conclusion that consumer spending “should remain resilient.” That framing carries weight because the Consumer Checkpoint specifically notes that it is measuring financial health, not sentiment. Consumer confidence surveys have remained historically disconnected from actual spending behavior for more than a year. The Bank of America data, which tracks what people do with their money rather than how they feel about the economy, provides a different lens on the same question.
Labor Market Data Softened in August but Remained Within Resilient Range
The September Consumer Checkpoint also includes labor market indicators drawn from Bank of America payroll and employment data. Job growth and after-tax wage growth both softened in August compared with prior months, but the report characterizes both metrics as continuing to “suggest a broadly resilient labor market.” The softening is a deceleration, not a contraction, a distinction that matters when the Federal Open Market Committee meets September 15 through 16 with a rate decision that could push borrowing costs higher.
Job switching picked up in August, with Gen Z workers leading the gains. Gender gaps in job-switching rates narrowed during the same period. An increase in job switching typically signals a labor market in which workers perceive sufficient opportunity to change employers, which in turn supports wage negotiation leverage and earnings mobility. The fact that the increase is concentrated among younger workers is consistent with the broader pattern in which early-career employees are more responsive to labor market conditions, both positively and negatively, than mid-career or senior workers.
For business owners and entrepreneurs tracking labor costs, the data suggests that wage pressure has not disappeared but has moderated. The convergence in wage growth across income groups means that compensation gains are becoming more evenly distributed rather than concentrated at the top of the income scale. That has implications for service-sector and retail employers who compete for workers in the income bands where the Bank of America data shows the most movement.
What the Data Signals for Q4 Retail and Small Business Planning
The Consumer Checkpoint’s September edition arrives two days before two data releases that will further shape the consumer spending picture for the remainder of 2026. On September 16, the Census Bureau will publish the August Advance Monthly Retail Trade report, providing the official government measure of retail activity for the same period the Bank of America data covers. The same day, the Federal Reserve will announce its rate decision following the September FOMC meeting, where markets are pricing an 83% probability of a quarter-point hike.
For retailers, the implications of the Consumer Checkpoint data are directional. The continued outperformance of big-box and general merchandise channels suggests that value positioning will remain the dominant competitive axis through the holiday season. Consumers are not retreating from spending but are choosing where and how they spend with increasing precision, favoring stores that offer competitive pricing, broad assortment, and one-stop convenience.
For small business operators, the data contains both a warning and an opportunity. The warning is that price sensitivity is a structural feature of the current consumer, not a seasonal fluctuation. The opportunity is that consumers are still spending, deposit balances remain above pre-pandemic levels, and the labor market is producing enough income growth to sustain activity. The question for Q4 is whether the Federal Reserve’s next move changes that calculus by raising borrowing costs, or whether the economy absorbs a rate hike the way it has absorbed elevated inflation: by trading down, shopping around, and spending anyway.
FAQs
What Is the Bank of America Consumer Checkpoint Report?
The Consumer Checkpoint is a regular publication from the Bank of America Institute that tracks U.S. consumer spending and financial health using aggregated, anonymized credit and debit card transaction data. The report covers total card spending, category-level trends, wage and employment data, household deposit balances, and credit utilization rates across income and age cohorts.
How Much Did Back-to-School Spending Reach in 2026?
The National Retail Federation projected total back-to-school spending at $146.8 billion in 2026, combining $43.3 billion for K-12 students and $103.5 billion for college students. K-12 spending rose 9.89% from $39.4 billion in 2025, with the average K-12 household planning to spend $863.86.
Are Consumers Cutting Back on Spending?
Total card spending per household rose 4.5% year-over-year and 0.9% month-over-month in August 2026, according to Bank of America data. Consumers are not reducing the total amount spent but are shifting where they spend, favoring big-box and general merchandise retailers that offer more competitive pricing over traditional retail channels.
What Does the K-Shaped Split Among Millennials Mean?
The Bank of America Institute identified Millennials, roughly ages 30 to 44, as the generation with the largest internal divergence in spending and financial behavior. Within this single cohort, outcomes range from dual-income homeowners with equity gains to renters managing student loans and childcare costs, creating a split that the report describes as the most pronounced K-shape across all generations.
How Does This Data Affect Small Business Planning for Q4?
The data indicates that consumers are maintaining spending levels but favoring value-oriented channels. For small businesses, price sensitivity is a structural condition rather than a temporary shift. However, elevated household deposit balances, declining credit utilization, and continued income growth suggest the consumer has capacity to spend through Q4, particularly if businesses position their offerings around value and convenience.
