There might be a break from a decline in consumer spending in Phoenix as year-over-year consumer spending increased nearly one percent in February, according to the Local Consumer Commerce Index released by JPMorgan Chase & Co. this month.
In the past few years, there has been a general decline in consumer spending with lower growth from 2014 to 2016, but the first quarter of 2017 seems to be “bucking that trend,” said Marvin Ward, researcher at JPMorgan Chase Institute.
“The desire to spend and get out there and engage in the economy seems to be going up, but again, it’s still a short period, so we’ll see how it shakes out,” Ward said.
Chase’s Local Consumer Commerce Index analyzes 19 billion anonymized credit and debit card transactions across 15 cities in the U.S., including Phoenix. The index only takes into account money spent in the city, leaving out online spending.
National consumer spending increased by 1.2 percent year-over-year between February 2016 and 2017.
The increased consumer spending in the Phoenix area reached both small businesses and restaurants. Spending at Phoenix small businesses increased 2.23 percent year-over-year in February. Spending at restaurants increased 4.64 percent year-over-year.
Ward notes there has been stable and strong growth at restaurants in many cities across the nation. Phoenix is no different.
Arizona restaurants have been doing particularly well during the first quarter of 2017 as a record number of food-service jobs were added.
The 15,100 new jobs in Arizona arrived after the minimum wage was increased from $8.05 to $10 an hour after voters approved Proposition 206 last November.
It’s difficult to determine the root cause of the boost in restaurant spending, Ward said. The cost of input has risen for restaurants, but those who work at the restaurants are also operating and spending money at restaurants in the areas they work at, Ward said.
And those who earn less now have more money to spend after the minimum wage increase, Ward noted.
What is easy to determine, though, is that spending growth from all segments of the income distribution has been strong, Ward said.
The highest earning quintile in Chase’s Commerce Index made positive contributions to overall growth for the first time since January 2015. Also, spenders between the ages of 55 and 64 didn’t subtract from growth, according to the Commerce Index.
Businesses, both small, medium and large, in the Index have also been spending more in the 15 cities accounted in the Index. February 2017 was the first month since October 2015 positive growth contributions were made.
“We should definitely keep paying attention to see what happens (with spending),” Ward said. “(Spending) looks good in the first quarter.”