A shaky economy isn’t stopping U.S. consumers from spending. A report from Bank of America found that spending in households with a credit or debit card was up 5.1 percent year over year in January and there was a significant increase of December 2022 debt numbers of 2.2 percent. 

Experts believe that consumers took advantage of holiday promotions and discounts. Additionally, an increase in the minimum wage in 20 states has improved consumer confidence and encouraged spending. 

Another factor spurring on consumers was an 8.7 percent increase in social security payments in January. This is the largest increase in more than 40 years, adding to the pockets of more than 70 million consumers. 

A positive labor market, and strong job numbers, has also driven consumer spending. 

“While spending was slowing toward the end of 2022, consumers have entered the new year with a spring in their step,” said David Tinsley, senior economist for Bank of America Institute. “With favorable macro tailwinds like the strength of the labor market and income gains, we have reasons to be hopeful that this increase is not just a blip but rather a longer-lasting trend.”

This does not mean that Americans are not feeling the pressure of inflation and recession. Rent and food costs continue to rise, affecting the spending power of lower income families. 

Americans continue to rely on their credit and debit card to make payments, up 8.6 percent in December. Spending per household was up overall on airline travel by 3.5 percent. It was also up 1.8 percent on purchases related to restaurants and bars. 

Americans are not making their retirement payments, however, with the rate of contribution to a 401(k) down to 6.6 percent at the end of 2021, falling even further to 6.4 percent in 2022. Experts believe people are putting funds that would have gone into retirement into covering short-term financial needs.