The SMI “remained historically elevated” in May at 123.3, although exceptionally low SMI readings at this point in 2020 are distorting the actual picture of consumer spending. The current SMI level implies that 59 percent of consumers are spending more than they did a year ago, while 41 percent are spending the same or less.
Compared to May of 2019 — well before the COVID lockdowns — 52 percent of consumers are spending more, up slightly from the 51 percent reported in April. This indicated that while the SMI slowed month to month, the breadth of consumer spending expended in May, once last year’s low figures are taken into account.
“May marks the one-year anniversary of the beginning of the consumer momentum recovery,” said Wayne Best, Visa’s chief economist. “The SMI’s strong reading again in May reflects the solid ongoing recovery taking place in the consumer sector.”
However, the SMI also shows uneven gains in spending momentum around the country. For example, in the Midwest, the SMI continues to trail other parts of the nation, with an SMI reading of 122.1 last month.
The western states, meanwhile, were among the parts of the country with the strongest consumer momentum at 125.5 percent. Visa attributes this to the region’s gradual reopening process and its status as an area where several states have achieved an adult vaccination rate of more than 50 percent.
This isn’t to say that the nation’s economic output is completely rosy at the moment. The Federal Reserve’s report from earlier this month found supply chain disruptions impacting the economy, with manufacturers reporting shortages of materials and labor, as well as delivery delays. The Fed also found many companies struggling to hire new workers, with this shortage leading companies to cut back on hours of operation.