Visa’s Spending Momentum Index is a new way to gauge the health of consumer spending—and overall participation by consumers in the recovery.
Leverage Visa’s economic indicator based on actual depersonalized and aggregated consumer spending behavior to understand changes in spend momentum impacting your business.
March 16, 2023 - Visa’s U.S. Spending Momentum Index (SMI) declined to 98.0 in February (seasonally adjusted), a decline of 2.8 points from 100.8 in January. The discretionary SMI fell 1.4 points month-over-month (MoM) from 100.0 in January, while the non-discretionary SMI rose 1.2 points from 100.1 points. The SMI’s fall back into contraction territory was partly a result of lapping the spending surge in February 2022 following the crest of the Omicron wave in January of 2022. Additionally, inclement weather in some regions of the country in February limited consumer mobility. On a regional basis, spending momentum decreased across all regions of the country from January to February, according to our analysis.
The Spending Momentum Index (SMI) leverages the power of the Visa network to fill an important gap in tracking and monitoring the overall momentum of cyclical upturns and downturns in consumer spending.
Based on current, depersonalized transaction data from a sample of Visa-branded credit and debit credentials, the SMI represents actual aggregate spending behavior by millions of consumers. This key advantage gives the SMI a timely, customizable view into consumer spending trends.
In addition to the national public SMI, sub-indexes are available to Visa clients on a subscription basis in four key areas: consumer location, card segment, spending sectors, and customized to the client’s portfolio.
Depending on how the SMI is used by the client, the index can help to inform acquisition, usage and retention initiatives. It can also be an early indicator of local and national changes in worker incomes and jobs, allowing for timely and comprehensive risk management. Additional industry benchmarking is available that can give clients a deeper understanding of payment and economic trends.
The Visa Spending Momentum Index (SMI)* is a leading economic indicator that provides a timely read on the health of consumer spending. The Index is based on a sample of current, depersonalized spending data from Visa-branded credit and debit credentials. The SMI is calibrated to be representative of all consumer spending regardless of form factor used for payment. When the SMI rises above 100, spending momentum is strengthening and when it falls below 100, spending momentum is weakening as fewer consumers are spending more, relative to the previous year. At 100, the SMI signifies that spending momentum is neutral and spending is growing at a pace consistent with its long-term trend.
Existing metrics often track consumer spending only based on sales at physical retail outlets. Growth in both consumers' purchases of services and their use of digital commerce channels often gets lost. Visa's SMI leverages the power of the Visa network to fill this important gap. The index is based on current, depersonalized transaction data from a sample of Visa-branded credit and debit credentials, representing actual spending behavior by millions of consumers. For this reason, the SMI provides subscribing, eligible clients a timely, customizable view into consumer spending trends at the national, regional, and local spending level, and encompasses both online and offline purchases.
No, the SMI differs from Visa's total payment volumes in two important ways. First, the index is based on the count of consumers spending more or less during a given period. Payment volume, in contrast, aggregates spending across those consumers and can be influenced by how many consumers are spending and how much they are purchasing. Second, payment volume statistics are based on spending on all Visa-branded credentials, whereas the index relies on a sample of credentials and therefore does not reflect Visa financial or operational performance.
In addition to the national figure that is publicly released, Visa's SMI can be segmented further for business intelligence. Depending on the data customization provided, the SMI can help to inform acquisition, usage, and retention initiatives. It can also be an early indicator of local and national changes in worker incomes and jobs, allowing for timely and comprehensive risk management. Additional industry benchmarking can help give clients a deeper understanding of payment and economic trends.
Sub-indexes are available on a subscription basis to eligible Visa clients in four key areas:
For eligible Visa clients, access to more detailed views based on geography, merchant segment and product of the data is available through subscriptions delivered via the Visa Analytics Platform. More custom engagements can be arranged by contacting Visa Consulting and Analytics (VCA), Visa's global client-facing team of several hundred payments consultants, data scientists and economists across six continents. VCA can help to identify an actionable SMI solution that best meets your needs and desired business outcomes. Contact: [email protected].
Anticipated SMI release schedule for 2023*
January 2023 |
February 9, 2023 |
February 2023 |
March 16, 2023 |
March 2023 |
April 13, 2023 |
April 2023 |
May 11, 2023 |
May 2023 |
June 8, 2023 |
June 2023 |
July 13, 2023 |
July 2023 |
August 10, 2023 |
August 2023 |
September 7, 2023 |
September 2023 |
October 12, 2023 |
October 2023 |
November 9, 2023 |
November 2023 |
December 14, 2023 |
The SMI is designed with customer data protection in mind. All SMI data is depersonalized so that it cannot be linked back to an individual. The data is also aggregated based on the count of credentials that have increased or decreased their spending according to various transactional-level attributes, then summarized into an SMI diffusion index. To ensure both privacy and statistical robustness, the number of credentials used in any SMI data sample must meet a minimum threshold. This threshold exceeds the minimum requirements of most survey methodologies. More information on data privacy is available here.
Visa's Spending Momentum Index measures the share of Visa-branded credit and debit cards that have increased their monthly spending compared to the same month in the previous year. Using proprietary filtering techniques, Visa samples the credentials to minimize the influence of commercial-related changes for every pair of observations over time. Together with adjustments made to sales volumes, these steps amplify the underlying signal on the momentum in consumer spending.
Each card that remains after filtering is assigned one of three scores: 200 for cards where spending has increased more than the long-term average growth rate in spending, 100 for cards with stable spending and 0 for cards with spending growth that falls below the long-term average. The long-term average growth rate is the five-year rolling average annual growth rate. The scores are then aggregated at a city-level. The data at the city level is then aggregated using population-weighted averages to create indices for higher levels of geographic aggregation (for example, city, state, province, regional and national, etc.). An SMI reading above the 100 threshold indicates broad based net acceleration in economic momentum, while values below indicate a contraction on an annual basis.
Seasonally-adjusted series are available for the headline and category cuts of the Visa U.S. SMI. The seasonally-adjusted series accounts for calendar year and floating holiday differences across years. We are using the X13-SEATS process developed by the U.S. Dept. of Commerce for our seasonal adjustment process.
The Visa Spending Momentum Index is currently available in Australia, Brazil, Canada, Ireland, Italy, the United Arab Emirates, the United Kingdom and the United States, allowing deeper comparison across regions globally.
Disclaimer:
*The Visa U.S. SMI is based on a sample of aggregated, depersonalized VisaNet and third-party data; it is not reflective of Visa operational and/or financial performance. SMI is provided “as is” without warranties of any kind, express or implied, including, without limitation, as to the accuracy of the data or the implied warranties of merchantability, fitness for a particular purpose, and/or non-infringement. Visa is not responsible for your use of the information contained herein, including errors of any kind, or any assumptions or conclusions you might draw from its use. Each SMI report is as of the publication date, and Visa has no obligation to update data contained therein.
The views, opinions, and/or estimates, as the case may be (“views”), expressed herein are those of the Visa Business and Economic Insights team and do not necessarily reflect those of Visa executive management or other Visa employees and affiliates. This presentation and content, including estimated economic forecasts, statistics, and indexes are intended for informational purposes only and should not be relied upon for operational, marketing, legal, technical, tax, financial or other advice and do not in any way reflect actual or forecasted Visa operational or financial performance. Visa neither makes any warranty or representation as to the completeness or accuracy of the views contained herein, nor assumes any liability or responsibility that may result from reliance on such views. These views are often based on current market conditions and are subject to change without notice.