JPMorgan Chase Institute’s Local Consumer Commerce Index Shows a 1.9 Percent Decrease in Consumer Spending Growth in August 2016

Today, the JPMorgan Chase Institute released its Local Consumer Commerce Index (LCCI) for August 2016, which showed that all but 3 of the 15 major U.S. cities studied experienced negative growth in year-over-year spending. Overall, year-over-year consumer spending growth declined by 1.9 percent in August - the largest dip since May 2016 and the second most significant decline in year-over-year growth since October 2013.

Denver experienced the fastest growth of all cities studied at 5 percent year-over-year. Across the 15 cities, consumer spending at restaurants contributed 0.2 percentage points to growth, along with spending on services, which contributed more than any other product type that month at 0.9 percentage points.

This report provides a timely view of how the following cities and surrounding metro areas are faring economically both individually and in aggregate: Atlanta, Chicago, Columbus, Dallas, Denver, Detroit, Houston, Miami, Los Angeles, New York, Phoenix, Portland (OR), San Diego, San Francisco, and Seattle. By looking at actual anonymized financial transactions, LCCI offers an ongoing, dynamic view of the health and vibrancy of the U.S. consumer and the places where businesses operate.

“August appears to have brought more of the same trends – with decreases in spending on durables and fuel and increased spending on restaurants and services,” said Diana Farrell, President and CEO of the JPMorgan Chase Institute. “The difference was a very sharp slowdown in spending at small and large businesses. Growth in these businesses has tended to offset declines in mid-sized businesses in recent months, and in August, this growth just wasn’t there.”

The key highlights from the latest Index include:

• Small businesses contributed an average of 0.6 percentage points to overall growth over the first eight months of 2016, but subtracted 0.2 percentage points in August; while mid-sized businesses subtracted 1.9 percentage points from overall growth in August. This is the largest reduction in spending at mid-sized businesses since the beginning of our series.
• Reductions in spending on durables subtracted more from overall growth than any other product type in each of the first seven months of 2016. August saw another substantial drop in durables spending, subtracting 1.5 percentage points from overall growth.
• Declines in fuel spending also subtracted 1.5 percentage points from overall growth in August, continuing an extended period of declining or flat growth that began in October 2014. These reductions in spending have been primarily driven by declining fuel prices.
• Spending by consumers that reside in the same neighborhood as the merchant has experienced a relatively volatile decline in growth since the end of 2015. Same neighborhood sales continued their downward trend in August 2016, subtracting 1.1 percent from growth.
• Spending by consumers that reside in a different metro area than the merchant experienced a rare decline in May. Since that time, however, growth has stabilized. Spending by these consumers has added 0.3 percentage points to growth in June, July, and August.

The LCCI offers unique advantages over existing measures of consumer spending.

• The LCCI captures actual transactions, instead of self-reported measures of how consumers think they spend.
• The LCCI provides timely data on spending in 15 major metropolitan areas; such geographic granularity is unavailable in most other spending measures. These 15 cities mirror the geographic and economic diversity of larger metropolitan areas in the United States and account for 32 percent of retail sales nationwide.
• The index also presents a more granular view of local consumer commerce through five important lenses: consumer age, consumer income, business size, product type, and consumer residence relative to the location of the business. For each lens, we show how different segments contributed to year-over-year spending growth.
• The LCCI captures economic activity in sectors that previously have not been well understood by other data sources. These include sectors such as food trucks, new merchants, and personal services.

Each release of the LCCI will describe the economic picture of local communities and provide a powerful tool for city development officials, businesses, investors, and statistical agencies to better understand the everyday economic health of consumers, businesses, and the places they care about.

The JPMorgan Chase Institute is a think tank dedicated to delivering data-rich analyses and expert insights for the public good. Its aim is to help decision makers–policymakers, businesses, and nonprofit leaders–appreciate the scale, granularity, diversity, and interconnectedness of the global economic system and use timely data and thoughtful analysis to make more informed decisions that advance prosperity for all. Drawing on JPMorgan Chase & Co.’s unique proprietary data, expertise, and market access, the Institute develops analyses and insights on the inner workings of the global economy, frames critical problems, and convenes stakeholders and leading thinkers. For more information visit: JPMorganChaseInstitute.com.