U.S. consumers are returning to pre-pandemic spending patterns.
That’s according to the Mastercard SpendingPulse, which reported Wednesday that March 2022 saw retail sales rise 8.4 percent from March 2021, and were up 18 percent compared to the month in 2019, excluding auto and gasoline sales.
As the world laps two years since the breakout of COVID-19, U.S. consumers continue to be financially healthy and are “rebalancing” their spending between stuff and experiences. As Mastercard indicated, spending on airline tickets, lodging and services is making a comeback while in-store business rebounds as mobility increases.
The findings are similar to the year-over-year growth trends seen last February and are slightly above January growth levels, Mastercard noted.
The Mastercard SpendingPulse measures in-store and online retail sales across all forms of payment and are not adjusted for inflation.
“A good piece of the 8.4 percent growth in total retail sales is driven by inflation but overall, the numbers show that the consumer is still healthy,” Steve Sadove, senior adviser for Mastercard and former chairman and chief executive officer of Saks Inc., told WWD.
“They have money in their pockets and still want to shop. We have seen that from January through March this year. There is a return to apparel shopping and people getting back into the stores, but they are also traveling and dining at restaurants.”
Still, Sadove cautioned about what could lie ahead, most importantly the growing impact of sky-high gas prices — though in recent days there’s been a slight decline; anniversarying last year’s government stimulus checks, which spurred shopping; a resurgence of COVID cases, and the extent consumers shift from spending on goods to spending on activities and experiences.
“We’re getting back to almost normal consumer behavior and a pre-pandemic trend line,” said Sadove. “But there are clouds on the horizon that you’ve got to watch out for.”
Sadove said March reflected continuity in trends that occurred during the holiday 2021 season, though March in itself should not be regarded as a bellwether. “You should be looking at the January through March period,” said Sadove.
In terms of the sales volume generated by retailers during March, Sadove said it’s about an average month, not any kind of peak period, though spring goods are more apparent on the shelves, encouraging spending. “Consumers are out there looking for freshness and fashion,” Sadove said.
In February, inflation hit 7.5 percent in the U.S., the highest it’s been since 1982. Supply chain disruptions, labor shortages and the strong consumer demand have pushed prices higher. The price of a gallon of gas at the pumps averages more than $4 across the country, and prices are rising due to the supply chain disruptions caused by the war in Ukraine and labor shortages.
In the following recap of spending, Mastercard highlights how consumer spending has recently become more diversified across the sector and channels. Among the findings for March, lodging rose 46.4 percent, airline ticket sales rose 44.8 percent, and restaurants were up 19.1 percent.
Yet the increase in services didn’t halt spending on goods, with luxury sales up 27.1 percent; apparel up 16 percent, and department stores ahead 14 percent.
With more people headed to stores, e-commerce slipped 3.3 percent, though that’s off from big gains a year ago, and online sales are still up 83.7 percent versus pre-pandemic levels, while in-store sales are up 9.4 percent compared to March 2019.
The states with the strongest growth rates in March were Hawaii, up 12.9 percent; Wyoming, up 12.2 percent; Colorado, up 11 percent; Florida, up 9.7 percent, and Texas, up 9.1 percent. Hawaii had the strongest growth rate for the month because it saw a big wave of honeymooners and tourists.
Mastercard also reported that fuel and convenience spending saw growth rates above 40 percent for most of the month. “While much of the growth is driven by inflation at the pump, consumer mobility has continued to recover as commuter traffic and leisure travel picked up,” Mastercard indicated.
“Retail sales remain strong, but are stabilizing as consumers resume spending on passion areas like travel, live entertainment, indoor dining and other in-person activities,” said Sadove. “After nearly two years of cautious optimism around the broader reopening, it’s a healthy sign that consumers are returning to a balanced level of spending across retail sectors and services.”
Excluding automotive sales. Mastercard SpendingPulse defines U.S. retail sales as sales at retailers and food service merchants of all sizes; sales activity within the services sector is not included.