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January 14, 2022
Visa: Consumer Spending Strong But Headwinds Tell
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The Visa U.S. Spending Momentum Index came in at 108.4 in December seasonally adjusted, its strongest reading for the month since the index launch, but it’s not all good news as discretionary spending momentum softened.

For the last three months of 2021, the SMI was 110.3, the high rating for the fourth quarter. The SMI is an economic indicator of the health of consumer spending, Visa stated. When it rises above 100, consumer spending momentum is strengthening and when it falls below 100, spending momentum is weakening as fewer consumers spend more relative to the previous year.

By category, the SMI for discretionary purchases fell 4.9 points from November to 103. The SMI for non-discretionary purchases rose 0.1 points to 99.9. On a regional basis, the SMI fell the most in the Midwest and South, with both declining 4 points in December. The Northeast reading fell 2.5 points and the West slid 1.8 points. The West was the best performing region in December with an SMI reading of 110.1.

“The SMI’s strong readings from October through December suggest that consumer spending ended 2021 on a strong note,” said Wayne Best, Visa’s chief economist in announcing the index reading. “However this month’s SMI reading additionally shows that there were adverse impacts to consumer spending in December, likely related to both the virus spread and severe weather across much of the country.”

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