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Michael McNamara, Mastercard SpendingPulse April, 2019 Economic Update NPECA
Michael McNamara, Mastercard SpendingPulse
April, 2019
Economic Update
NPECA
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Disclosure
© 2019 Mastercard International Incorporated. All rights reserved.
Mastercard SpendingPulse™ and Mastercard Sector Insights™ reports and content, including estimated forecasts of spending trends, (i) do not in any way contain, reflect or relate to actual Mastercard operational or financial performance, or specific payment-card-issuer data; and (ii) are solely for informational purposes and shall not be relied upon by any person for the purpose of investment or other financial decisions.
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SpendingPulse Existing Capabilities: Scaled Dollar Estimates
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
1/1
/20
10
4/1
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10
7/1
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10
10
/1/2
01
0
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11
4/1
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11
7/1
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11
10
/1/2
01
1
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12
4/1
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12
7/1
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12
10
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01
2
1/1
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13
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13
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13
10
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01
3
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14
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14
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14
10
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4
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15
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7
SP vs. DOC
Sales Since 2010
SP DOC
Current Situation: SpendingPulse is built on Speed / timeliness, Accuracy and Insights through granularity. We are literally the best in the world at producing scaled dollar estimates based on Payment data. Below is a chart that maps SpendingPulse total retail sales (ex auto) with the Census Advanced monthly survey for retail sales:
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SP vs. DOC
Y/Y Since 2003
SP_YY DOC_YY
Global Macro Highlights
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5SOURCE: BLOOMBERG CONTRIBUTOR COMPOSITE FORECAST, NATIONAL COUNTRY DATAJANUARY 10, 2019
The World Economy 2019 GDP Forecast
2019 U.S. Retail Economy
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Sales GrowthIn Oct 2018
7SOURCE: SPENDINGPULSE™
The macroeconomic fundamentals continue to support spending growth in 2019 with positive readings for employment, wage growth.
Confidence readings remain at historically elevated levels.
US Macroeconomic Variables
4.1%
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Sales GrowthIn Feb 2019
8SOURCE: SPENDINGPULSE™
Retail sales (ex auto and gas) growth rates have decelerated from the +5% growth in 2018.
Expect a bounce in April with a late Easter and generally better early Spring weather in 2019.
Sales Growth YoY
Total ex-Auto ex-Gas
2.6%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Ap
r-1
7
Ma
y-1
7
Jun
-17
Jul-
17
Au
g-1
7
Sep
-17
Oct
-17
No
v-1
7
Dec
-17
Jan
-18
Feb
-18
Ma
r-1
8
Ap
r-1
8
Ma
y-1
8
Jun
-18
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18
Au
g-1
8
Sep
-18
Oct
-18
No
v-1
8
Dec
-18
Jan
-19
Feb
-19
Ma
r-1
9
U.S. Total Retail Sales Growth xGas
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Most sectors continue to see year-over-year growth even against difficult comparisons with 2018.
Hardware / home spending still leads, watch Specialty Apparel sales growth decelerate as store closings in 2019 act as a sea anchor pulling down sector growth.
SOURCE: SPENDINGPULSE™ 9
U.S. Sector Performance
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10SOURCE: SPENDINGPULSE™
U.S. GasolineWe have seen volatility in year-over-year growth in pumping over the past 4-5 weeks due to 2018 weather and the Easter calendar shift.
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11SOURCE: SPENDINGPULSE™
U.S. GasolineWe have seen generally lower gasoline pumping in the past 4 weeks.
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12SOURCE: SPENDINGPULSE™
U.S. GasolineThe recent price increases combined with weather and travel related pumping spikes in March 2018 have lead the 4 week moving average to slip into negative territory.
-14.0%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
4-Jan 11-Jan 18-Jan 25-Jan 1-Feb 8-Feb 15-Feb 22-Feb 1-Mar 8-Mar 15-Mar 22-Mar 29-Mar 5-Apr
Y/Y chgs in Pumping and Prices
Y/Y chg in Pumping Y/Y chg in Prices
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13SOURCE: SPENDINGPULSE™
U.S. GasolineThe Eastern regions have been under the most pressure from a year/year perspective with the 4 Nor'easter events in March 2018.
-8%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
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New England Central Atlantic Lower Atlantic Midwest Gulf Coast Rocky Mountain West Coast
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14SOURCE: SPENDINGPULSE™
U.S. GasolineThe Eastern regions have been under the most pressure from a year/year perspective with the 4 Nor'easter events in March 2018.
Online RetailThe Shift to Digital
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Online sales growth accelerated in March with a growth rate of 18.5%. This is an improvement over the 14% growth in February and is actually above the 18.1% growth in January.
SOURCE: SPENDINGPULSE™
16
U.S. eCommerce Sector Performance
Total eCommerce 18.5%
Leading
Family Apparel 13.2%
Jewelry 13.1%
Footwear 11.7%
Lagging
Electronics 7.3%
Department Stores 5.8%
Children's Apparel 2.0%
SectorsYear-over-Year
March 2019
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17SOURCE: SPENDINGPULSE™
Even as the base of comparison has grown, the pace of growth in online share of sales has accelerated since 2015. It is 11.1% through the first two months of 2019.
U.S. eCommerce Channel Share & Growth, Annual
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
201920182017201620152014
U.S. eCommerce Share of Total Retail Sales U.S. eCommerce Y/Y Sales Growth
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18SOURCE: SPENDINGPULSE™
U.S. eCommerce Channel Share & Growth, Annual
Channel Share by Sector for
March
In Store
eCommerce
Total U.S. Retail Sales x Auto
88.3%
11.7%
Department Store
75.5%
24.5%
Apparel
56.1%
43.9%
Jewelry
71.5%
28.5%
Children's Apparel
Family Apparel
Women's Apparel
Footwear
All Other
Online sales share was almost 12% of retail sales in March (new record). As you can see several individual sectors online share are well past the overall retail share.
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19SOURCE: SPENDINGPULSE™
Online sales share of Grocery was stuck at 0.5% to 1% for years, then in 2016 the share shift began to pick up momentum as delivery logistics began to get solved and accepted across the mass market.
% share
Grocery online share
+0.0%
+0.5%
+1.0%
+1.5%
+2.0%
+2.5%
+3.0%
+3.5%
+4.0%
+4.5%
Jan
-05
Jul-
05
Jan
-06
Jul-
06
Jan
-07
Jul-
07
Jan
-08
Jul-
08
Jan
-09
Jul-
09
Jan
-10
Jul-
10
Jan
-11
Jul-
11
Jan
-12
Jul-
12
Jan
-13
Jul-
13
Jan
-14
Jul-
14
Jan
-15
Jul-
15
Jan
-16
Jul-
16
Jan
-17
Jul-
17
Jan
-18
Jul-
18
5.3%YoY share Jan
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Online ShareIn November 2018
20SOURCE: SPENDINGPULSE™
Online share of sales by day increased as we moved towards the end of the month when online sale surpassed 20% during Cyber week. Note that the online share numbers can be significantly different when analyzing specific sectors.
Total Retail% of sales by channel by day
23.3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2018 -
Nov 1
2018 -
Nov 3
2018 -
Nov 5
2018 -
Nov 7
2018 -
Nov 9
2018 -
Nov
11
2018 -
Nov
13
2018 -
Nov
15
2018 -
Nov
17
2018 -
Nov
19
2018 -
Nov
21
2018 -
Nov
23
2018 -
Nov
25
2018 -
Nov
27
2018 -
Nov
29
Online Sales In Store and Other Sales
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Online ShareIn November 2018
21SOURCE: SPENDINGPULSE™
Online purchases account for over 60% of sales during the Cyber Monday-Thursday timeframe.
Expect share numbers to revert to a more normal pattern in December.
Specialty Apparel% of sales by channel by day
24.6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
20
18
- N
ov
1
20
18
- N
ov
2
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3
20
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10
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30
Online Sales In Store and Other Sales
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22SOURCE: SPENDINGPULSE™
Channel share of sales has returned to a more typical pattern of peak online days during the early week period where approximately 30% of sales close online.
Saturdays continue to show over 85% of sales closing in stores.
Share of Sales by Channel
Furniture & Furnishings
2.6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Online Sales In Store and Other Sales
U.S. Geographic Views
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Total Retail (ex auto) Y/Y Growth2018
Area of consistent strength Area of
consistent strength
Area of consistent strength
What are you comparing against in Q1 2019
Weather Events
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Polar Vortex1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/311/211/201/19 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/311/211/201/19 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/311/211/201/19 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/311/211/201/19 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/311/211/201/19 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/311/211/201/19 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/311/211/201/19 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/311/211/201/19 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/311/211/201/19 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/311/211/201/19 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/311/211/201/19 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/311/211/201/19 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/30 1/311/211/201/19
Polar vortex
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March 2018: Total Retail (ex auto) Y/Y Growth3/1 3/2 3/3 3/4 3/5 3/6 3/7 3/8 3/9
3/16 3/17 3/18 3/19 3/20 3/21 3/22 3/23 3/24
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DMA Rankings
2019 Outlook
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The current SpendingPulse forecasts call for growth in 2019 albeit at a slower pace than 2018. The higher rate environment along with uncertainty around trade situations will dampen the growth prospects this year.
Fed GDP forecasts:
• 2019: 2.5%
• 2020: 2.0%
• 2021: 1.8%
SOURCE: SPENDINGPULSE™ 30
US Recessions
2019 2.5%
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SOURCE: SPENDINGPULSE™ 31
Gasoline pumping in the last recession
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
Y/Y chg in Pumping
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Sales GrowthIn Feb 2019
32SOURCE: SPENDINGPULSE™
The macroeconomic fundamentals continue to support spending growth as we enter 2019 with strong momentum in employment, wage growth and a benefit from lower gasoline prices vs 2018.
Macroeconomic Variables: What to Watch
4.0%
Watch for
• Significant sustained erosion in the confidence surveys
• Disappointing payroll growth (below 100k)
• Auto parts and service increases without increases in gasoline pumping
• Stock market declines (post Fed raising cycle)
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SectorsYear-over-Year
2019
Total Retail (ex auto and gas) +4.4%
Restaurants +5.8%
Airlines +4.5%
Lodging +3.4%
Grocery +3.5%
Department Stores -2.2%
eCommerce + 18.3%SOURCE: SPENDINGPULSE™ 33
U.S. Sector Performance 2019 Oulook
Overall US retail sales (ex auto and gasoline) is expected to increase 4.4% in 2019. This is down from the 5% growth in 2018.
Restaurant sales are expected to be up 5.8% as lower gasoline prices and a strong employment situation create a supportive environment for sales growth.
