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Gaining Confidence, and Shopping for Big Ticket Items: The U.S. Consumer

Sarah Quinlan |

MasterCard’s latest SpendingPulse report showed May 2013 annual retail sales growth at 4.4 percent, and a three-month average year-over-year growth of 3.3 percent. These data point to a growing willingness on the part of American consumers to spend. The “how” is if anything just as important as the “what.”

One of the reasons for the aggregate growth numbers is the “wealth effect” of stronger real estate and stock markets. As these grow, consumers feel more positive about their overall wealth. This effect, in addition to the lower fuel prices, makes consumers more willing to spend, according to the latest Spending Pulse report, which does not reflect MasterCard performance.

While the Wall Street Journal notes in a recent story (subscription required) that certain retailers are noticing that consumers are willing to spend on big ticket items in ways they didn’t before, the reality is more complex. Though, for example, demand for cars is rising, potentially being helped by lower fuel process (sales for vehicles and parts grew 1.8 percent in May, the best growth in six months) what consumers are really looking for is value.

MasterCard proprietary consumer research shows that 54 percent of respondents in 2012 said they were cutting down on purchases they make. While this number was 62 percent in 2008 during the depths of the crisis, the majority of consumers are still weighing their purchase decisions carefully. This suggests that consumers are still willing to spend on the items they need, but they don’t make those spending decisions lightly.

Global Insights’ own annual research into spending on credit and debit cards shows that the U.S. consumer is growing slowly but steadily more confident and is more willing to spend. That research, referenced in the first post about the Spending Pulse numbers, is coming soon, and together MasterCard’s other data will provide a more comprehensive look at how the U.S. consumer is reacting to this changing economic landscape.

Topics: Economic Outlook, Retail Trends

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