U.S. Consumer Spending Capped a Year-Long Recovery With a Strong May Reading, Visa Says

Consumer spending has now been recovering for a full year from the impact of Covid-19, according to a report released on Wednesday by Visa Inc. The card network’s U.S. Spending Momentum Index, which it began releasing publicly last month, registered a reading of 123.3 for May. That number indicates 59% of consumers are spending at higher levels than they did in May 2020, with 41% spending the same or less, Visa says.

A comparison with spending in May 2019 indicates 52% of consumers spent more last month, the report indicates, up a tick from the 51% reading in April compared to two years earlier. Consumer spending in 2019 was not impacted by the store closings and other measures taken to combat the pandemic, which did not begin affecting the U.S. economy until March 2020.

“The SMI’s strong reading again in May reflects the solid ongoing recovery taking place in the consumer sector,” said Wayne Best, chief economist at Visa, in a statement.

The news is mixed, however, as spending appears to have stronger momentum in some regions of the country than others. The Midwest’s 122.1 May reading is the weakest, Visa says, while the West registered the strongest level at 125.1. The report credits the West’s moves to re-open stores—along with a 50% or better vaccination rate in several states—for the higher reading.

Visa says the index is not an indicator of its own performance either financially or operationally as a payments network. Instead, it is calculated on the basis of sample data derived from its VisaNet operation. The scoring of the data results in an index value between zero and 200. 

While the index is new to the public, Visa had been providing it to clients privately. Clients continue to have access to more detailed data.