Visa Launches U.S. Spending Momentum Index—A New Way to Gauge the Economic Health of U.S. Consumers
Visa (NYSE: V) has introduced the Visa U.S. Spending Momentum Index (SMI), an economic gauge reflecting consumer spending health. The SMI reached 136.0 in April 2021, with 65% of consumers spending more than the previous year. The index highlights recovery post-pandemic, surpassing pre-pandemic spending levels for 51% of consumers. While consumer confidence is increasing, spending momentum varies regionally, particularly in areas with high job losses during the pandemic. Visa aims to publish SMI components monthly for public access, supporting economic recovery insights.
- Visa SMI reached 136.0 in April 2021, indicating robust consumer spending recovery.
- 65% of consumers are spending more compared to last year.
- 51% are spending more than in April 2019, reflecting a strong rebound.
- The SMI is now publicly available monthly, enhancing transparency on consumer spending trends.
- Spending momentum remains uneven, with cities experiencing high job losses lagging behind in recovery.
- Chicago's SMI averaged only 100.5 compared to 104.0 in Atlanta over the last year.
Visa (NYSE: V) today launched the Visa U.S. Spending Momentum Index (SMI), an economic indicator designed to be a timely gauge of the health of consumer spending. The Visa SMI delivers insight into what drives upturns and downturns in spending by measuring the breadth of the momentum supporting these trends.
“This past year underscores the importance of looking not only at how much is being spent, but also how many consumers are spending,” said Wayne Best, Visa’s Chief Economist. “What made the most recent downturn and now recovery so different than any previous business cycle was how the pandemic impacted the ability as much as the willingness of consumers to spend. Understanding how many consumers are feeling sufficiently confident and financially secure to spend more is at the heart of what the Visa SMI does.”
In April 2021, the Visa SMI hit 136.0, confirming that the U.S. economic recovery remains on firm ground. At its current level, the Visa SMI implies that 65 percent of consumers are now spending more than they did a year ago, while only 35 percent are spending the same or less. Even compared to April 2019, which was not affected by the pandemic and lockdowns, 51 percent of consumers are spending more. The SMI reached its lowest level in April 2020 at 70.5 and did not pass 100 again until October, indicating that many people were still unable to participate in the recovery for much of 2020. While the downturn this time was deeper, the recovery has been six months faster than the recession of 2008-2009.
“The SMI’s latest strong reading provides evidence that consumer confidence is building as the pace of vaccinations increase and restrictions are eased across the country,” added Wayne Best. “Signs of economic recovery, additional stimulus payments and optimism that the pandemic is waning are contributing to stronger spending compared to last year and even within recent months."
The gains in spending momentum, however, remain uneven. The SMI for cities that experienced the greatest job losses in April 2020 has been on average 1.5 points lower over the last year than cities where job losses were more limited, indicating that fewer consumers were able to join the recovery where joblessness was higher. The SMI for Chicago, one of the hardest hit cities in terms of job losses, has averaged 100.5 over the last 12 months, compared to a city with fewer job losses such as Atlanta, where the SMI was 104.0 over the same time frame. The gap between the two has narrowed within the last three months, helped in part by Chicago’s progress in vaccinating a greater share of its residents.
Previously only available to Visa clients, Visa is now publishing components of the SMI on a monthly basis for the general public, in part to help track economic recovery progress. The SMI builds on Visa’s commitment to powering commerce by providing tools and insights to uplift people, businesses and economies everywhere.
About the Visa SMI
The Visa SMI is based on a sample of aggregated, depersonalized VisaNet data. Visa adjusts this data through proprietary methods to exclude factors that do not reflect spending momentum. The resulting sample data is then aggregated using a diffusion index framework where index values are scored from 0 to 200. When the Visa SMI rises above 100, the consumer spending momentum is strengthening and when it falls below 100, the spending momentum is weakening as fewer consumers are spending more relative to the previous year. The index is adjusted for day of week, month, holidays, and broad annual trends, and these seasonal adjustments are subject to revision each year.
The Visa SMI does not take into account the volume of payments nor does it rely on all Visa-branded credentials, and therefore does not reflect Visa operational or financial performance. It is intended for informational purposes only and is offered on an “as is” basis without any warranties of any kind, express or implied. Each SMI report is as of the publication date.
Eligible Visa clients in the U.S may access more detailed and customized insights at the national, regional and local spending level, including spending on the main categories of goods and services.
For more information about the Visa U.S. Spending Momentum Index, please visit www.visa.com/partner-with-us/visa-consulting-analytics/spending-momentum-index.html
About Visa
Visa (NYSE: V) is the world’s leader in digital payments. Our mission is to connect the world through the most innovative, reliable and secure payment network - enabling individuals, businesses and economies to thrive. Our advanced global processing network, VisaNet, provides secure and reliable payments around the world, and is capable of handling more than 65,000 transaction messages a second. The company’s relentless focus on innovation is a catalyst for the rapid growth of digital commerce on any device, for everyone, everywhere. As the world moves from analog to digital, Visa is applying our brand, products, people, network and scale to reshape the future of commerce. For more information, visit About Visa, visa.com/blog and @VisaNews.
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FAQ
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