Everybody just relax: Last quarter’s slowdown in consumer spending doesn’t spell gloom and doom. There are hints that households are again ready to unleash the pent-up buying power spurred by low gasoline prices.
So says an early look at last month’s consumer spending data from Visa Inc., which released figures Thursday as part of a new quarterly report.
Retail sales excluding automobiles and gas stations increased 4.5 percent in April from the same time in 2014, the figures show. While that’s a touch below the 5.3 percent gain in March, the pace has stabilized at a higher rate than last year and the kinds of items Americans are buying are keeping Wayne Best, Visa’s chief economist, buoyant that consumers are ready to open their wallets a bit more.
“What I see in the data this month are some signs of some discretionary purchases starting to pick up,” Best said in an interview. People are “starting to free up some of that savings that they’ve been enjoying in the gas-price windfall and starting to spend it.”
Spending at hotels jumped 9.4 percent last month from a year earlier, its fastest pace since November. Purchases at electronics, appliance and furniture stores showed their strongest gain in three months. Restaurant sales, which have been running hot for quite a while, also hit a three-month high.
And building-supply stores and hardware stores, which notched a 9.4 percent year-over-year gain in March, advanced 4.5 percent in April for the second-best reading since November.
The Visa figures offer one of the first looks at household spending for the second quarter; the government won’t be releasing the more widely watched official retail sales figures for April until May 13. Government data showed that retail sales in March increased at aslower pace than projected, capping a lackluster first quarter. (Recap: West Coast port disruptions, a stronger dollar, lower energy prices and severe weather all conspired todepress economic growth to its weakest pace in a year.) The big question since then has been whether that slowdown will prove temporary or longer-lasting.
The Visa figures, while using similar categories, are compiled differently from the survey data used by the Commerce Department, making year-over-year rates not comparable. Visa also adds figures for spending at hotels and on airfare and car rentals to the mix.
Visa says it sees roughly 25 cents of every retail dollar spent in the U.S., among the billions of transactions that flow through its network each day. The data represented in this quarterly report extrapolate figures from about 40 million accounts in an algorithmic model that determines overall spending across types of transactions, Best said.
By comparison, the Commerce Department’s monthly retail sales report surveys about 5,000 firms on its first take before revisions.