New data from MasterCard shows U.S. consumers are continuing to shift their spending towards “experiences,” such as dining out, entertainment and travel, rather than buying products and goods.
According to the latest SpendingPulse report, U.S. retail sales were up 4.6 percent year-over-year in July. This is the largest year-over-year growth since October 2012, evidence of the ongoing economic recovery.
Lodging, Airlines and Restaurants were among the top categories for U.S. retail sales last month, while Automotive, Grocery and Luxury items (excluding Jewelry) were less sought after by consumers.
“By and large, the U.S. economy has shown signs of positive growth over the last few months, especially as weather in most of the country improved,” said Sarah Quinlan, Senior Vice President, Market Insights for MasterCard Advisors. “Positive economic statistics such as new job hiring are giving consumers more confidence that the recovery is a reality. This confidence is seen in people taking vacations and dining out. They’re choosing to truly ‘experience’ the rebound.”
This movement towards experiential spending has also extended to other discretionary categories such as Jewelry, which has recorded 17 consecutive months of year-over-year growth.
“The rebound of discretionary spending is a good sign, particularly as retailers start planning for the holidays,” said Quinlan. “However, this trend has not benefited Apparel or Department Store retailers. Despite heavy promotions and discounting for back-to-school, their sales will likely be fairly muted as parents hold off on shopping for new clothes until the weather turns colder.”
For additional insights into U.S. retail sales and what driving these trends, check out MasterCard’s Market Insights on-demand webinar series here.