Despite growth in 11 of 14 major purchase categories, a Visa survey finds more than half of consumers say they are pocketing savings from lower gasoline prices

SAN FRANCISCO--(BUSINESS WIRE)-- Visa announced today that Americans modestly increased their spending in April, with growth across most major purchase categories, according to Visa’s Retail Spending Monitor (RSM), a quarterly report that tracks retail spending patterns based on real-time purchase data. Retail spending in April was up 4.5 percent from the prior year, excluding automobile and gasoline purchases. Amid a strengthening housing market and renewed confidence in the economy, Americans continue to open their wallets for restaurant meals, hotel stays, household goods like appliances and furniture, and other more day-to-day needs. Eleven of the fourteen major spending categories that Visa tracks showed growth from the prior year.

“Across the country, we’re seeing consumers continue to spend as their confidence in the economy grows,” said Wayne Best, Visa’s Chief Economist. “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.”

Several discretionary categories showed solid increases in April from the prior year, with some eclipsing their March growth rates. The increase suggests that American households with incomes greater than $100,000, who generally are more likely to be able to contribute to discretionary spending and less likely to be impacted by swings in gas prices, may be driving the increase in spending. For instance:

• Restaurant spending rose 9.5 percent from the prior year in April, compared to a 7.6 percent increase in March.
• Hotel spending was up 9.4 percent from the prior year in April, compared to a 9.2 percent increase in March.

Household good spending, at places like electronics, appliance, and furniture stores, increased 5.1 percent in April from the prior year, compared to 1.5 percent in March.

Impact of Gas Prices

Gas prices continue to affect consumers’ mind set and spending behavior. Prices have fallen 30 percent over the last year, averaging $2.47 per gallon in April. Consumers received an unexpected windfall on average of $1.19 per gallon compared to a year ago, or between $50 and $75 a month in average household savings.

However, a recent Visa survey found that, amid the increase in gas prices that began in February, more than half of respondents (52 percent) said that they planned to save the unexpected windfall from lower prices at the pump, while nearly a quarter (24 percent) said they planned to use it to pay down debt. Only 30 percent said they planned to spend more at other places.

These survey results are evident in Visa’s RSM data. Although April retail spending (excluding autos and gas) was up 4.5 percent from the prior year, it has slowed significantly since the first three months of 2015. In January, when gas prices hit their recent lows, retail spending was up 6.0 percent from the year before. There was also a noticeable impact in consumer spending in several major categories. Some changes include:

• Home improvement spending growth, at places like building supply, hardware, and garden stores, slowed to 4.5 percent in April from the prior year, compared to a 9.4 percent increase in March.
• Clothing store spending increased just 0.1 percent in April from the prior year, after growing by 3.7 percent in March.
• Warehouse and general merchandise spending growth, such as at big-box retailers, slowed to 4.8 percent in April from the prior year, compared to 6.7 percent in March.
• Non-store retail spending growth, such as at online retailers, slowed to 4.6 percent in April from the prior year, compared to 5.5 percent in March.

“What matters is not the price at the pump today, but where consumers see gas prices headed,” noted Best. “After gas prices rose every single day in February, 70 percent of consumers said they expected them to keep rising over the next three months – and not surprisingly, they modified their spending habits. We saw that trend again in April when gasoline prices steadily ticked upward in the latter half of the month, causing consumers to spend more cautiously and pocket much of the savings from lower prices at the pump.”

About Visa Inc.

Visa Inc. (NYSE:V) is a global payments technology company that connects consumers, businesses, financial institutions, and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. We operate one of the world's most advanced processing networks — VisaNet — that is capable of handling more than 56,000 transaction messages a second, with fraud protection for consumers and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa's innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, pay ahead of time with prepaid or pay later with credit products.

For more information, visit usa.visa.com/about-visa, visacorporate.tumblr.com and @VisaNews.

About Visa’s Retail Spending Monitor

Drawing upon the power of the world’s largest payment network, Visa’s Retail Spending Monitor provides a real-time window into how and where Americans are spending their money -- and its broader impact on the economy. With billions of transactions flowing through its payment network each day, Visa sees roughly 25 cents of every retail dollar spent in the United States. Using these actual transactions as a starting point, Visa has created a sophisticated, robust model that allows it to gauge overall spending activity across all forms of payment and across major spending categories, including retail, travel and entertainment. The RSM relies on aggregated, depersonalized transaction data and is not reflective of Visa’s operational and/or financial performance.

Photos/Multimedia Gallery Available: http://www.businesswire.com/multimedia/home/20150507005287/en/

Source: Visa Inc.