Visa: Consumer Spending Growth Slows Slightly But Remains Strong

The Visa U.S. Spending Momentum Index (SMI), which was created to gauge the health of consumer spending, registered a June 2021 reading of 111.7, marking a slight decrease from May’s reading of 123.3, according to a Friday (July 9) announcement.

The 100+ reading indicates that consumer spending was growing year over year, yet it was expanding at a bit of a slower cadence than what was observed in May, according to the announcement.

“Consumer spending continues to hold up well,” Wayne Best, Visa’s chief economist, said in the announcement. “Although there remains a lot of unevenness between regions, the SMI’s solid reading again in June reflects a continued broadening of the spending recovery across regions of the country.”

At its present reading, the Visa SMI implies that 53 percent of consumers are presently spending more than they did one year ago and that 47 percent of them are spending the same or less.

The Visa SMI is based on a collection of depersonalized and aggregated VisaNet data, which Visa adjusts via proprietary measures to leave out factors that don’t reflect spending momentum.

PYMNTS previously reported that The Conference Board Consumer Confidence Index went up in June, reaching its highest point since the coronavirus pandemic took hold in March 2020, marking the fifth consecutive month that the index has risen.

Consumer confidence provides a view into people’s perception of economic conditions and how optimistic they’re feeling about spending on merchandise and services.

“While short-term inflation expectations increased, this had little impact on consumers’ confidence or purchasing intentions. In fact, the proportion of consumers planning to purchase homes, automobiles, and major appliances all rose — a sign that consumer spending will continue to support economic growth in the short-term,” Lynn Franco, senior director of economic indicators at The Conference Board, said in a June announcement.

The Consumer Confidence Index climbed to 127.3 in June, marking an increase from a reading of 120 in May.