Consumer spending has increased dramatically over the same period a year ago, when states ordered all but vital workers to remain at home due to the coronavirus pandemic, according to data from several major financial institutions, The Hill reported on Tuesday.
This spending spree could help struggling businesses that have had a difficult time surviving the pandemic. What is even more impressive in the data is that spending levels are also higher than the same period in 2019, a year before the coronavirus crisis.
"We're well above where we were even in April of 2019, and I think that speaks broadly to the additional stimulus that people have received," Visa chief economist Wayne Best told The Hill.
Visa's Spending Momentum Index, which indicates how much cardholders are purchasing and how they are spending the money, indicates that 65% of consumers are spending more than last year at this time, and 51% are buying more than they did at a similar time two years ago.
Similar studies from other financial institutions also indicate a positive trend.
Mastercard's SpendingPulse barometer, for example, shows Americans are spending more on large purchases that usually require visits to showrooms.
Sales of furniture increased 72% from last year and 21% from 2019, while jewelry sales more than tripled from last year and have gone up 14% from 2 years ago.
In addition, purchases at department stores have increased nearly 10% from 2 years ago.
"April's retail sales growth reinforces that the American consumer is healthy and eager to spend, especially on categories such as restaurants, which have faced restrictions over the past year," said Mastercard senior adviser Steve Sadove. "The fact is that people are excited to gather again and they're refreshing their look for the occasion."
This can also be seen by sales at restaurants, which in April more than doubled from last year, according to Mastercard’s data, and were up 6% higher than April two years ago..
Part of the rise in spending is due to higher prices, as the global logistics chain struggles to meet demand and shortages of items such as semiconductors and home-building supplies boosts costs.
Bureau of Labor Statistics shows that the Consumer Price Index has gone up 4.2% in the last year, the fastest rate of increase since 2008.
However, the burst of spending in March was not matched last month, at least when measuring monthly gains, government figures released last week showed, with spending little changed last month after the 10.7% spike in March, according to The Hill.
Other factors leading to increased spending are higher vaccination rates and stimulus payments made via the $1.9 trillion American Rescue Plan, in addition to earlier coronavirus relief legislation.
Approximately a quarter of stimulus money has been spent, while consumers have used an additional 35% to pay down debts, with some 40% going into savings, according to Visa’s Best.