Consumers spent more in August compared to last year, but not as much as they dropped on goods and services in July, according to Visa’s latest U.S. Spending Momentum Index (SMI).
The August SMI was 109, down 2.9 points from July. A reading over 100 is a sign that people are still spending more than they did last year during the same time period.
“Although consumer spending momentum downshifted in August, the recovery remains on track,” Wayne Best, Visa’s chief economist, said in a press release on Friday (Sept. 10). “Based on a strong first half and our forecast for economic growth to reaccelerate after a brief pause during the third quarter, U.S. consumer spending for the full year of 2021 should still expand at its fastest pace in decades.”
The SMI for discretionary spending — nonessential goods and services — dropped two points from July to 105.8. Non-discretionary spending was unchanged at 100.1. The southern region of the U.S. saw the biggest declines, dropping 4.7 points to 108.7. The SMI in the Northeast was 109.3, it was 108.3 in the Midwest and in the West it was 111.2, per the release.
The Visa SMI measures consumer spending as a barometer of the economy by offering insight and measurement into spending ups and downs. The index is based on a “sample of aggregated, depersonalized VisaNet data” and leaves out any information that is not a reflection of spending momentum.
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The Bureau of Economic Analysis (BEA) reported at the end of last month that consumer spending in July was up 0.3% over June, and personal income increased 1.1%. The personal savings rate — the portion of disposable income that people save — was 9.6%, up from 8.8% last month, PYMNTS reported.