Economist's Note
Brian LeBlanc, Senior Economist PNC Economics Research

Key Findings

  • Spending accelerated: Total card spending rose 5.3% YoY in April, the fastest pace in roughly four years.
  • Gas hasn't broken the trend (yet): Gas spending is ~26% YoY heading into May, but broader spending has not rolled over.
  • Spring cash is cushioning the hit: Average tax refunds are up 11%, and lower withholding is supporting take-home pay.
  • The gap is narrowing: Lower-income spending has improved meaningfully in 2026, and the gap versus higher-income households has continued to shrink.
  • What to watch: Fiscal support likely fades over the next ~three months, leaving income growth and gas prices as swing factors for the second half of 2026.

The U.S. consumer is not tapping out yet and continues to show surprising resilience despite a sharp rise in gasoline prices linked to the Iran conflict.

PNC card data show total consumer spending accelerated in April, rising 5.3% year-over-year, the strongest pace since 2022. The improvement has been broad-based. Spending excluding gas and overall discretionary spending also picked up, suggesting households have not yet meaningfully pulled back much elsewhere to absorb higher fuel costs.

A boost in tax refunds this year is doing a lot of heavy lifting. Call it springtime stimulus-delivered by the IRS. Larger tax refunds and lower withholding taxes in 2026 are more than offsetting higher fuel costs for now. Average tax refunds are running more than 11% above last year, helping sustain household purchasing power even as gas prices climb.

That said, tax refunds are being spent more quickly than last year, particularly among lower-income households, and a smaller share is being used to pay down debt. The money is moving from refund to checkout faster.

Lower-income spending has emerged as a clear bright spot. While a K-shaped pattern remains, the gap between lower- and higher-income consumers has narrowed. The split is still there, but it’s less dramatic than it was. Spending growth among lower-income households accelerated in early 2026 and reached its fastest pace since 2022 in April.

The next few months are crucial, as the impulse from higher tax refunds fades. When that tailwind eases, paychecks and the price at the pump will decide whether spending can keep its pace into the second half of 2026.

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