Visa: Retail spending up 4.5%
San Francisco -- 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% from the prior year, excluding automobile and gasoline purchases.
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.
Household good spending, at places like electronics, appliance, and furniture stores, increased 5.1% in April from the prior year, compared to 1.5% in March.
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.
Although April retail spending (excluding autos and gas) was up 4.5%, 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% from the year before. There was also a noticeable impact in consumer spending in several major categories. Some changes include:
• Home improvement spending growth, at places like building supply, hardware, and garden stores, slowed to 4.5%i n April from the prior year, compared to a 9.4% increase in March.
• Clothing store spending increased just 0.1% in April from the prior year, after growing by 3.7% in March.
• Warehouse and general merchandise spending growth, such as at big-box retailers, slowed to 4.8% in April from the prior year, compared to 6.7% in March.
• Non-store retail spending growth, such as at online retailers, slowed to 4.6% in April from the prior year, compared to 5.5% in March.
• Visa noted that slightly rising gasoline prices are causing consumers to rein in their spending.
What matters is not the price at the pump today, but where consumers see gas prices headed,” said Wayne Best, Visa’s chief economist. “After gas prices rose every single day in February, 70% 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.”