Consumer spending remains on an uptrend. Spending on auto loans and leases, personal loans, and credit cards are up 39 percent from April 2020, according to Equifax, and up 11 percent from April 2019. Personal loans and credit cards saw the greatest demand from consumers.
Visa confirms the above consumer spending growth (but slowing) with its Visa U.S. Spending Momentum Index (SMI). The index registered 111.7 for June 2021, which is a little lower than May’s 123.3 reading.
As of July 9th, 26 states had discontinued unemployment stimulus. Unemployment stimulus provides a $300 weekly bonus to workers and is set to expire for all states on September 6th. Some states have reversed their decision on canceling unemployment stimulus. These include Indiana and Maryland. Jobless residents in Texas and Ohio have sued to reverse their states' decision to cancel benefits.
As of the beginning of 2021, the cargurus.com used car index is up 21.8%, putting the average car price at $27,408. While the index is still rising, the pace started slowing at the end of June. This doesn't mean used car prices have peaked, but the trajectory points to the potential for a peak.
Overall, the consumer remains strong and spending is still in an uptrend, although one that is slowing. Expect services to continue to be the largest portion of overall spending. After being locked down for most of 2020, consumers will be looking for outdoor and out-of-home experiences such as movies, vacations, and dining.
We'll have to wait until September to see what impact cutting off unemployment stimulus might have. But from states that have discontinued the stimulus, there hasn't been a noticeable impact on spending. COVID variants such as the Delta variant are still unknowns in how they may impact the economy. The Fall is likely to be a real test when it comes to variants.
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