Consumer spending as tracked by Facteus, which sources from financial institutions offering services to the low-to-middle income, has rebounded across numerous goods and services since the first week of June. The retail sales miss in May (-1.3% vs -0.8% MoM) prompted concerns about the waning impact of stimulus after an exceptionally strong March print (11.3% MoM). However real-time measures of consumer spending suggest moderate improvements as we head into the summer months.
Consumers’ shift from goods to services remains clearly visible. Spending on services including air travel, dating apps, and dining are now 11.7% higher than a year ago. Goods have improved, but remain -6.4% below a year ago. The spread between the median year-over-year change has been convincingly tilted toward services since late March 2021.
Consumers’ search activity for going-out and staying-in topics has tempered since the last stimulus checks in March. However, we are beginning to see troughs in searches for many going-out topics including commuting, restaurants, and travel. We must round this corner to keep the ‘good times’ going.
As for payrolls, search activity by would-be applicants remains robust for topics from job interviews to resume services. Economists’ median estimate for June payrolls continues to inch higher currently at 720k. Their range runs from 400k to 1.05M. Initial jobless claims have fallen the most for states having already ended enchanced UI benefits. We expect these same states to see larger than average job growth, particularly part-time jobs, according to state-by-state search activity.
Lastly, consumers’ search activity across all phases of the home purchase process remains quite sluggish. Consumers are indeed shifting to services, but have tempered expectations to spend on large ticket items like autos and homes. As we have shown over recent months, consumer surveys reveal real apprehension over elevated prices.