Investing.com -- Bank of America analysts said in a note Thursday that “DOGE cuts appear to be weighing on spending in DC” based on February BAC card data.
According to the bank, the data showed weaker consumer spending in the Washington, D.C. metro area compared to previous months and other East Coast cities.
BAC card spending per household “was up 0.3% m/m in February on a SA basis,” and the bank expects the Census Bureau’s “February retail sales ex-autos figure to come in flat” while the core control group is expected to rise 0.2%.
However, BofA said spending in the Washington, D.C. area notably underperformed relative to comparable metro areas, suggesting that recent federal job cuts tied to DOGE were a factor.
To assess the impact of DOGE-related layoffs, BofA analysts controlled for external variables such as colder-than-usual weather by comparing D.C.’s spending patterns to six major East Coast cities—Boston, New York City, Philadelphia, Baltimore, Charlotte, and Atlanta.
Their findings suggest that D.C.'s spending slowdown “was likely related to DOGE cuts” rather than weather-related disruptions.
Spending weakness was most pronounced in discretionary categories such as restaurants, while necessity spending, such as groceries, remained stable.
“The cuts appear to have affected discretionary spending such as restaurants, but not necessity spending such as groceries,” wrote the bank.
Despite the weakness in the D.C. metro area, BofA noted that “the DC metro area only accounts for about 3% of the BAC card data sample.”
As a result, “total card spending growth is holding up for now,” indicating that the impact of DOGE cuts remains localized.
However, analysts will continue to monitor data to determine “whether the drag is growing over time.”