Americans' daily reports of spending averaged $81 in January. This is down $17 from December. However, spending generally falls after the holidays. However, this January's estimate is stronger than those in any January from 2009 to 2012.
December daily spending averages are often among the highest of the year because of holiday shopping. The drop in January is largely attributable to less shopping and gift buying after the holidays. However, comparing January 2015 with past Januaries can indicate how comfortable Americans feel with their finances and the level of discretionary money they have. That the daily average in January 2015 is the one of the highest since January 2008 is a good sign for the economy, and helps reinforce other positive economic measures, such as increased job creation and economic confidence.
Average daily spending fell among upper- and lower-income Americans in January. However, spending dropped more, $40, among the upper-income group (those making at least $90,000 a year) than among the lower-income group (those making less than $90,000), $14. The $40 drop among upper-income Americans is the largest monthly decline seen since January 2011. Among lower-income Americans, the $14 drop is the largest since January 2014. Last month, upper-income Americans reported spending an average of $137 per day, compared with $71 per day among lower-income Americans.
While a drop in reported spending is not usually a good sign for the U.S. economy, it is common and expected in January. Therefore, last month's drop is not especially troubling, especially because it is in line with prior January drops, and because the current monthly average remains well above what Gallup measured from 2009 to 2012.
Low gas prices could leave Americans with more money to spend in other places, although it is not clear whether the drop in gas prices affects net spending. Americans may just use the money they would have spent on one type of purchase (gas) on another (such as retail). Consumers ended 2014 on a strong note, with the Commerce Department on Friday indicating that robust spending drove an estimated 2.6% increase in the U.S. gross domestic product in the fourth quarter.
Self-reported consumer spending is a new behavioral economics measure based on the individual reports of a random sample of Americans. The focus is on consumer discretionary spending, including on basics such as gas purchases at the pump and more optional impulse purchases online or in stores. Excluded are routine spending, including the consumer's monthly bills, and big purchase items such as automobiles and housing.
By tracking consumers' reports of how much they spend on a daily basis, investors can monitor not only overall discretionary spending trends, but also the impact on Americans' spending patterns of everything from the day of the week to special events.
Gallup's self-reported Consumer Spending measure is a real-time indicator of Americans' discretionary spending. The behavioral characteristics of this new measure provide early and unique insights into how consumer spending is responding to various changes in the business environment.
Further, the spending measure provides estimates on a continuing basis, giving an early read on what the government eventually reports for retail sales roughly two weeks after the close of each month. Overall, Gallup's behavioral-based spending measure allows business and investment decisions to be based on essentially real-time consumer spending information.