Visa said that its U.S. Spending Momentum Index (SMI) rose to 110.6 in October, up 2.1 points from September. The additional increase above 100 signals that even more consumers are spending more than they did a year ago.
The Visa SMI is an economic indicator of the health of consumer spending. 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.
By category, the SMI for discretionary purchases rose 1.5 points from the previous month to 106.5. The SMI for non-discretionary purchases rose 1.3 points to 100.9, which is a return to positive spending momentum after contracting last month.
The growth was fastest in the Northeast, rising 3.1 points. The South (up 2.9 points) and Midwest (up 1.7 points) also rose for the month. The West posting the most modest rise in momentum at 0.1 points. While the West posted the smallest month-over-month gain, the SMI reading for the region remains the strongest among the four at 111.3 in October.
“This month’s SMI reading supports our view that consumer spending is set to bounce back in the fourth quarter,” said Wayne Best, Visa’s chief economist. “With new U.S. COVID case counts declining and consumer confidence rebounding, we expect a solid pace of consumer spending and economic growth through the end of the year.”