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The Visa Retail Spending Monitor showed a modest uptick in spending during April, with 4.5% growth overthe same period last year in 11 of 14 retail categories.
The quarterly report looks at spending patterns using data from cardholders. This spring, spending was up at restaurants, hotels, and at household goods and furniture stores, among other categories. Automobiles and gasolinewere not included in the report.
Visa’s chief economist, Wayne Best, attributed the small spike in spending to renewed consumer confidence in the economy and a stronger housing market. “Across the country, we’re seeing consumers continue to spend as their confidence in the economy grows.”
“With spending increases over the prior year from retailers and restaurants as well as a more robust travel sector, this broad-based growth is making an important contribution to the economic recovery,” Best added.
Households making over $100,000 drive spending increase
Discretionary spending categories in which people in households earning more than $100,000 a year are more likely to be able to afford saw the biggest jumps. Restaurant spending, for example, rose 9.5% over last year, and hotel spending was up 9.4%. Purchases at electronics, appliance, and furniture stores rose as well, climbing 5.1% year-over-year. Warmer weather tends to push household goods spending; in March, those same categories only saw a 1.5% increase from last year.
Gas prices impact spending patterns
With gasoline prices falling fast, consumers have more room in their budgets for spending in other places. Fuel prices are down 30% from this time last year and averaged $2.47 per gallon nationwide in April. Consumer savings of $1.19 per gallon, on average, meant folks had between $50 and $75 more per month burning holes in their pockets.
People might be choosing to sock that money away instead of spending it, however. In a recent Visa survey, 52% of respondents said they would put any money recouped due to lower gas prices into savings. Another 24% said they’d use the extra cash to pay down their debt. Thirty percent said they would use at least some of the savings to spend more in other places (respondents could choose more than one answer).
Not all roses
Although the 4.5% spending increase is encouraging news for the economy, the picture isn’t entirely rosy. Spending was up more in the first quarter of 2015, when gas prices first dropped, with a 6% increase from the first quarter of 2014. And spending in certain categories slowed significantly in April—for example, spending on clothing was up 3.7% year-over-year in March, but slowed to only 0.1% in April.