Visa Inc. on Wednesday introduced to the general public its Visa Spending Momentum Index, a measure of what the global payments network calls “the health of consumer spending,” and the latest number indicates the U.S. economy is doing far better in the wake of business reopenings.
In April, the index registered 136, which means 65% of consumers are spending more than they did in April 2020, the first full month of the Covid-19 pandemic’s grip on the U.S. economy. Thirty-five percent are spending at the same level or less.
The index for April last year was 70.5 and did not reach 100 until October, Visa says. But, the company adds, 51% of U.S. consumers are now spending at levels higher even than those seen in April 2019.
A reading above 100 indicates spending momentum is gaining strength, Visa says, while one below 100 shows weakening momentum, with fewer consumers spending more compared to the prior year period.
“Consumer confidence is building as the pace of vaccinations increase and restrictions are eased across the country,” said Visa chief economist Wayne Best, in a statement. “Signs of economic recovery, additional stimulus payments, and optimism that the pandemic is waning are contributing to stronger spending compared to last year and even within recent months.”
As might be expected, the index varies across cities as some areas recover faster than others. The index for Chicago, for example, averaged 100.5 over the past year, compared to Atlanta at 104. Chicago’s job losses due to Covid-19 were heavier than most urban areas, but the city’s effort to vaccinate more of its citizens has helped narrow the difference with Atlanta, Visa says.
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. Now it will be generally available each month, the company says, though clients have access to more detailed data.