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Younger and Low-Income Consumers Drive Local Small Business Spending Growth, According to New JPMorgan Chase Institute Data

Consumers older than 55 consistently subtract from small business spending growth.

October 10, 2017 (Washington, D.C.) – Today, the JPMorgan Chase Institute released a new consumer spending brief evaluating small business spending growth from January 2014-April 2017, as well as the Local Consumer Commerce Index (LCCI) for June 2017, which showed positive consumer spending growth in 10 of the 15 US cities analyzed.

The small business spending brief evaluated small business spending in 15 US cities over a period of three years, and found that younger and lower income consumers were key drivers of small business spending growth. Over the period of January 2014 to April 2017, growth in spending at small businesses by consumers under the age of 35 grew by 1.4 percentage points. In contrast, small business spending growth by consumers over the age of 55 declined by 1.5 percentage points over that same period of time.

Similarly, low-income consumers increased small business spending growth by 6.8 percentage points while small business spending growth decreased among the wealthiest quintile of consumers by 5.8 percentage points.

The findings of this brief are consistent with Local Consumer Commerce Index data for June 2017, which found year-over-year growth of 1 percent, continuing the trend of positive growth rates that started in February 2017. Consumers 55 and over subtracted 1.2 percentage points from year-over-year growth, while consumers under the age of 35 contributed 1.9 percentage points to growth.

Data visualization of the changes in local consumer spending growth over the last 24 months can be found online.

This LCCI 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-Ft. Worth, Denver, Detroit, Houston, Miami, Los Angeles, New York, Phoenix, Portland (Ore.), San Diego, San Francisco, and Seattle. By looking at actual, de-identified financial transactions, the LCCI offers an ongoing, dynamic view of the financial health of the U.S. consumer and the vibrancy of the places where businesses operate.

“We’ve seen five months of positive growth, beginning in February 2017, continuing a positive and sharp contrast to the negative growth we saw in late 2016,” said Diana Farrell, President and CEO, JPMorgan Chase Institute. “At the same time, we continue to see trends showing older consumers acting as a drag on growth, while young consumers continue to lead the way, particularly with respect to small business spending. We will continue tracking which direction this trend goes heading into the holiday shopping season.”

Additional key highlights from the latest Index include:

  • Spending in New York grew by 1.8 percent between June 2016 and June 2017, the highest growth rate of all large cities.
  • Spending in Denver grew by 9.1 percent year-over-year, the highest growth rate of all LCC cities, while spending in Seattle declined by 7.3 percent.
  • Consumers in the top income quintile subtracted 0.2 percentage points from growth, the first negative growth contribution for consumers in the top income quintile since January 2017.
  • Consumers in the bottom income quintile saw the largest growth contribution amongst all income quintiles, contributing 0.7 percentage points to growth.
  • Spending from consumers in the same metro area as the merchant (but not the same neighborhood) contributed 1.1 percentage points in June 2017, while a decline in spending from consumers that reside outside of the metro area subtracted 0.3 percentage points from year-over-year growth.
  • Small businesses contributed 0.7 percentage points to year-over-year growth in June 2017, the fifth consecutive month of sustained positive growth.

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 LCCI 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 describes the economic picture of local communities and provides 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.


About the JPMorgan Chase Institute

The JPMorgan Chase Institute is a global 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 better facts, timely data, and thoughtful analysis to make smarter decisions to advance global prosperity. 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.