Visa recently announced its Retail Spending Monitor (RSM), a quarterly report that tracks retail spending patterns based on real time purchase data. The report highlights how Americans have modestly increased their spending in April, with growth across most major purchase categories. Retail spending in April was up 4.5% from the previous year, excluding automobile and gasoline purchases. Amid a strengthening housing market and renewed confidence in the economy, Americans continue to open their wallets for restaurant meals, hotel stays, household goods like appliances and furniture, and other more day-to-day needs. Eleven of the fourteen major spending categories that Visa tracks showed growth from the previous year as highlighted by the following illustration:
Several discretionary categories showed solid increases in April from the previous year with some eclipsing their March growth rates. The increase suggests that American households with incomes greater than $100,000, who generally are more likely to be able to contribute to discretionary spending and less likely to be impacted by swings in gas prices, may be driving the increase in spending. For instance:
> Restaurant spending rose 9.5% from the previous year in April compared to a 7.6%-increase in March
> Hotel spending was up 9.4% from the previous year in April compared to a 9.2%-increase in March
> Household goods spending at electronics, appliance and furniture stores, increased 5.1%in April from the previous year compared to 1.5% in March
Gas prices continue to affect consumers’ mindsets and spending behavior. Prices have fallen 30% over the last year, averaging $2.47 per gallon in April. Consumers received an unexpected windfall on an average of $1.19 per gallon compared to a year ago, or between $50 and $75 a month in average household savings.
However, a recent Visa survey found that amid the increase in gas prices that began in February, more than half of the respondents (52%) said that they planned to save the unexpected windfall from lower prices at the pump, while nearly a quarter (24%) said they planned to use it to pay down debt. Only 30% said they planned to spend more at other places.