Consumer spending remained solid in June, with a majority of consumers spending more than they one year ago.
That’s according to the Visa U.S. Spending Momentum Index (SMI). In June 2021, the Visa SMI registered 111.7, down 11.6 points from the May reading of 123.3. The reading above 100 suggests consumer spending was expanding year-over-year, but at a slightly slower pace than was seen in May. (A reading above 100 indicates consumer spending momentum is strengthening.)
At its current level, the Visa SMI implies 53% of consumers are now spending more than they did one year ago, with 47% spending the same or less.
Compared to June 2019, before the pandemic, 51% of consumers are spending more, down slightly from 52% of consumers who were spending more in May. This implies that while the SMI decelerated on a month-over-month basis, the actual downshift in the pace of consumer spending was modest.
“Consumer spending continues to hold up well,” said Wayne Best, Visa’s chief economist. “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.”
Spending momentum, although broadening, remains uneven across regions of the country. The SMI for the Midwest region continued to lag behind other parts of the country, with an SMI reading of 109.5 in June.
For the second month in a row, the West ranked among the regions with the strongest consumer momentum at 115.9, as the region lagged in its recovery this time last year.
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.
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.