Business News

Mastercard Data Indicates That Consumer Spending Is Holding Steady

Distressed Patriotic Flag Unisex T-Shirt - Celebrate Comfort and Country $11.29 USD Get it here>>


A recent report indicates a significant rise in consumer spending over the past year, but the report’s impressive spending figures may lose some of their luster when considered in light of the persistent inflation which has affected the U.S. economy over the same period.

New data from MasterCard SpendingPulse indicates that consumer retail spending (excluding automobile purchases) rose by 8.4 percent year over year in March 2022.

While the report noted a 3.3 percent decline in online retail spending since March 2021, this subtle decline was more than made up for by an 11.2 percent rise in in-store spending, as consumers have gradually begun to return to brick and mortar retail as the CCP (Chinese Communist Party) virus pandemic subsides.

Spending on luxury goods was the fastest-growing category measured in the report, rising at a rate of 27.1 percent since March 2021. Restaurant spending rose 19.1 percent over the same period—unsurprising perhaps, given that the past year has seen a continued de-escalation of the restrictions on the restaurant industry initially introduced to curtail the pandemic.

On the other hand, spending on electronics and appliances rose by a much more modest 3.1 percent, while grocery spending saw a 6.8 percent growth over the same one-year period.

On the surface, the data indicates that consumer spending continues to grow at an abnormally high pace two years into the CCP virus pandemic. However, these figures are perhaps less impressive when adjusted for inflation.

As the value of money diminishes on account of higher prices, it naturally follows that consumer spending will have to rise proportionally in order for people to continue buying the same goods and services they were previously. Therefore, total spending figures unadjusted for inflation can be misleading.

The Consumer Price Index (CPI) report for March 2022 is due to be released on April 12. However, analysts at FXStreet have forecasted that the year-over-year CPI for March will show 8.5 percent price inflation, placing inflation figures just slightly higher than consumer spending increases. The picture which emerges is one of stable consumer spending adjusted for inflation over the past year.

These results are consistent with the findings of a survey conducted by the strategy consulting firm Daggerfinn, which sought to measure the impact of recent economic hardships and price increases on consumer spending habits.

“While higher prices have definitely impact some individuals, we found that many respondents indicating that their spending habits haven’t changed—even with higher prices,” Daggerfinn Brand Strategist Kane Carpenter told The Epoch Times.

“For example, more than 40 percent of respondents indicated that have not changed their dining habits at all. The insensitivity to price increases is even more pronounced with commuting habits, where some 71 percent of respondents indicated that higher gas prices haven’t changed commuting habits. Granted, there is probably some short-term inelasticity going on when it comes to commuting.”

It is important to note that, while adjusting for inflation counterbalances most of the gains made in consumer spending in the past year, spending is still significantly higher over the past three years even with rising prices accounted for. The same MasterCard SpendingPulse report indicated an 18.0 percent rise in consumer spending in the period since March 2019, well above the rate of inflation for the same period. Thus, while consumer spending relative to inflation has seemingly plateaued in the past year, it remains at a higher level than pre-pandemic norms.

Nicholas Dolinger

Follow

Nicholas Dolinger is a business reporter for The Epoch Times and creator of “The Beautiful Toilet” podcast.



Source link

TruthUSA

I'm TruthUSA, the author behind TruthUSA News Hub located at https://truthusa.us/. With our One Story at a Time," my aim is to provide you with unbiased and comprehensive news coverage. I dive deep into the latest happenings in the US and global events, and bring you objective stories sourced from reputable sources. My goal is to keep you informed and enlightened, ensuring you have access to the truth. Stay tuned to TruthUSA News Hub to discover the reality behind the headlines and gain a well-rounded perspective on the world.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.