Despite growth in 11 of 14 major purchase categories, a Visa survey
finds more than half of consumers say they are pocketing savings from
lower gasoline prices
SAN FRANCISCO--(BUSINESS WIRE)--May 7, 2015--
Visa announced today that Americans modestly increased their spending in
April, with growth across most major purchase categories, according to
Visa’s Retail Spending Monitor (RSM), a quarterly report that tracks
retail spending patterns based on real-time purchase data. Retail
spending in April was up 4.5 percent from the prior 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 prior year.
“Across the country, we’re seeing consumers continue to spend as their
confidence in the economy grows,” said Wayne Best, Visa’s Chief
Economist. “With spending increases over the prior year from retailers
and restaurants as well as a more robust travel sector, this broad-based
growth is making an important contribution to the economic recovery.”
Several discretionary categories showed solid increases in April from
the prior 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 percent from the prior year in April,
compared to a 7.6 percent increase in March.
Hotel spending was up 9.4 percent from the prior year in April,
compared to a 9.2 percent increase in March.
Household good spending, at places like electronics, appliance, and
furniture stores, increased 5.1 percent in April from the prior year,
compared to 1.5 percent in March.
Impact of Gas Prices
Gas prices continue to affect consumers’ mind set and spending behavior.
Prices have fallen 30 percent over the last year, averaging $2.47 per
gallon in April. Consumers received an unexpected windfall on 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 respondents (52
percent) said that they planned to save the unexpected windfall from
lower prices at the pump, while nearly a quarter (24 percent) said they
planned to use it to pay down debt. Only 30 percent said they planned to
spend more at other places.
These survey results are evident in Visa’s RSM data. Although April
retail spending (excluding autos and gas) was up 4.5 percent from the
prior year, it has slowed significantly since the first three months of
2015. In January, when gas prices hit their recent lows, retail spending
was up 6.0 percent from the year before. There was also a noticeable
impact in consumer spending in several major categories. Some changes
Home improvement spending growth, at places like building supply,
hardware, and garden stores, slowed to 4.5 percent in April from the
prior year, compared to a 9.4 percent increase in March.
Clothing store spending increased just 0.1 percent in April from the
prior year, after growing by 3.7 percent in March.
Warehouse and general merchandise spending growth, such as at big-box
retailers, slowed to 4.8 percent in April from the prior year,
compared to 6.7 percent in March.
Non-store retail spending growth, such as at online retailers, slowed
to 4.6 percent in April from the prior year, compared to 5.5 percent
“What matters is not the price at the pump today, but where consumers
see gas prices headed,” noted Best. “After gas prices rose every single
day in February, 70 percent of consumers said they expected them to keep
rising over the next three months – and not surprisingly, they modified
their spending habits. We saw that trend again in April when gasoline
prices steadily ticked upward in the latter half of the month, causing
consumers to spend more cautiously and pocket much of the savings from
lower prices at the pump.”
About Visa Inc.
Visa Inc. (NYSE:V) is a global payments technology company that connects
consumers, businesses, financial institutions, and governments in
more than 200 countries and territories to fast, secure and reliable
electronic payments. We operate one of the world's most advanced
processing networks — VisaNet — that is capable of handling more than
56,000 transaction messages a second, with fraud protection for
consumers and assured payment for merchants. Visa is not a bank and does
not issue cards, extend credit or set rates and fees for consumers.
Visa's innovations, however, enable its financial institution customers
to offer consumers more choices: pay now with debit, pay ahead of time
with prepaid or pay later with credit products.
For more information, visit usa.visa.com/about-visa,
About Visa’s Retail Spending Monitor
Drawing upon the power of the world’s largest payment network, Visa’s
Retail Spending Monitor provides a real-time window into how and where
Americans are spending their money -- and its broader impact on the
economy. With billions of transactions flowing through its payment
network each day, Visa sees roughly 25 cents of every retail dollar
spent in the United States. Using these actual transactions as a
starting point, Visa has created a sophisticated, robust model that
allows it to gauge overall spending activity across all forms of payment
and across major spending categories, including retail, travel and
entertainment. The RSM relies on aggregated, depersonalized transaction
data and is not reflective of Visa’s operational and/or financial
Photos/Multimedia Gallery Available: http://www.businesswire.com/multimedia/home/20150507005287/en/
Source: Visa Inc.
Jake Standish, +1 415-770-3027 (mobile)
Kim, +1 347-224-1720 (mobile)