BofA Data Shows Resilient Consumer Spending Ex-Gas, Driven by Tax Refunds and High-Income Households

Bank of America's early April data reveals a solid 3.6% year-over-year increase in card spending, excluding gasoline, suggesting underlying consumer demand remains healthy.

This growth is primarily driven by larger-than-usual tax refunds and robust spending from high-income households, highlighting a continued "K-shaped" economic pattern.

While surging gasoline prices are pushing headline inflation higher, the boost from tax refunds is currently offsetting this pressure, though this balance could shift if high fuel costs persist.

Recent data from Bank of America shows that consumer spending remains surprisingly resilient, even as rising gas prices strain household budgets.

In early April 2026, total card spending, excluding the volatile gasoline category, grew by a healthy 3.6% compared to the same period last year. To understand the real picture, we can adjust this for inflation. With Core CPI running at 2.6%, this nominal growth translates to a real spending increase of about 1.0%. It's not a boom, but it signals that consumer demand has a steady, positive pulse beneath the surface.

So, what's fueling this unexpected strength? The story unfolds with two key drivers. First, households are receiving a significant cash injection from what's being called a 'super-refund' season. Thanks to retroactive changes in a 2025 tax law, the average tax refund in 2026 is up about 10-11% year-over-year. BofA estimates this could inject an extra $65 billion into the economy, with perhaps $20-25 billion being spent in the first month alone. This provides a powerful, albeit temporary, tailwind.

Second, the data confirms a persistent 'K-shaped' recovery, where different segments of the economy recover at different rates. High-income households are leading the charge, with their spending consistently outpacing that of middle- and lower-income groups. This cohort is better positioned to navigate the Federal Reserve's restrictive policy of high interest rates, supported by a strong labor market for high-wage jobs and gains from assets.

However, this resilience is being tested by a major headwind: a sharp energy shock. Geopolitical conflict pushed the national average gasoline price above $4 per gallon by the end of March. This spike acts like a tax, siphoning an estimated $12.3 billion in extra monthly costs from consumers' wallets. This is precisely why the March headline inflation rate jumped to 3.3%, while core inflation, which excludes energy, remained contained at 2.6%. It's a targeted shock, not a broad-based inflation surge.

In essence, the current consumer economy is a tug-of-war. The short-term boost from tax refunds is, for now, winning against the drag from the gas pump. But this is a fragile balance. The strength is concentrated at the top and powered by a temporary factor. The health of the consumer in the second half of the year will largely depend on whether gas prices retreat before the refund money runs out.

Core CPI: An inflation measure that excludes volatile food and energy prices to provide a clearer view of underlying inflation trends.
K-shaped recovery: An economic recovery where different parts of the economy rebound at different rates, creating a divergence (like the arms of the letter 'K') between winners and losers.
Restrictive policy: Central bank actions, such as raising interest rates, aimed at slowing down economic growth to control inflation.

BofA Data Shows Resilient Consumer Spending Ex-Gas, Driven by Tax Refunds and High-Income Households

Bank of America's early April data reveals a solid 3.6% year-over-year increase in card spending, excluding gasoline, suggesting underlying consumer demand remains healthy.

This growth is primarily driven by larger-than-usual tax refunds and robust spending from high-income households, highlighting a continued "K-shaped" economic pattern.

While surging gasoline prices are pushing headline inflation higher, the boost from tax refunds is currently offsetting this pressure, though this balance could shift if high fuel costs persist.

Recent data from Bank of America shows that consumer spending remains surprisingly resilient, even as rising gas prices strain household budgets.

Core CPI: An inflation measure that excludes volatile food and energy prices to provide a clearer view of underlying inflation trends.
K-shaped recovery: An economic recovery where different parts of the economy rebound at different rates, creating a divergence (like the arms of the letter 'K') between winners and losers.
Restrictive policy: Central bank actions, such as raising interest rates, aimed at slowing down economic growth to control inflation.