Bank of America says that consumers are aware of rising prices but still plan to make large purchases.

Key Takeaways

• The latest Bank of America survey of consumers shows that Americans expect to spend more on staples, and they have noticed fewer discount offers.
• Bank of America reported that more Americans plan to make large purchases, such as a new appliance or home.
• The survey revealed that more than 40 percent of consumers plan to purchase a brand new vehicle within the next 12 months.

The latest Bank of America consumer survey shows that Americans expect to pay higher prices for everyday items, but they plan to make more large purchases.

Bank of America’s March survey revealed that shoppers expect to pay more for staples such as groceries and are less likely to receive discounts. The findings of the research are in line with yesterday’s U.S. Retail Sales data which showed signs of consumer stress. According to the Census Bureau retail spending increased by 0.2% from January in February, which was less than the 0.6% growth forecasters expected.

The survey found that almost 40% of Americans expect to spend a greater amount on groceries in the coming three months. The survey found that half of respondents with lower incomes expect to spend more on groceries in the next year. This is the highest percentage recorded since Bank of America began the survey in December of 2020. 

Survey shows that more people are planning to buy a new home or appliance

Bank of America reports that, despite the tightening of budgets, consumers are more likely to plan large purchases today than a previous year. Around 31% plan to invest in home improvements over the next three month, up from 27% a year ago. The percentage of people planning to buy a new home or appliance—or have a baby—in the next 12 months also increased, the survey found.

More than 40 percent of consumers surveyed plan to buy a brand new vehicle within the next year. The rising price of cars has led to Americans holding onto their cars longer. According to Apollo Global Management the average age for cars on the roads recently reached 14 years.

Tariffs on China, Canada, and Mexico are seen pushing up motor vehicle prices 6.1%, according to The Budget Lab at Yale. “Assuming an average selling price of $48,000 that translates to an extra $2,900, though the actual effect would depend on the exposure of different models to Canadian, Mexican, and Chinese parts & production,” they wrote earlier this month.