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Casinos enjoy rise in US consumer spending

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Consumer spending

US household spending is rising steadily. Consumer spending accounts for two-thirds of US economic activity. Extremely low gasoline prices as well as a strengthening labor market are supporting consumer spending.

This indicates an improvement in disposable household income. Consumer spending in the United States is reported on a monthly basis by the U.S. Bureau of Economic Analysis.

In January 2015, the average daily consumer spending for Americans amounted to $81, up by $3 compared to $78 in January 2014. On a month-over-month basis, spending dropped sharply. Spending usually drops after the holiday season, falling an average of $15 each January since 2008.

The drop in January is largely attributable to less shopping and gift buying after the holidays. Despite this year’s $17 drop, $81 is one of the highest self-reported averages in any January since 2008. This is a good sign for increased job creation and growing economic confidence.

Survey methods

The January 2015 average consumer spending figure is based on Gallup Daily tracking interviews with 14,721 US adults. The poll asks Americans to estimate the total amount they spent yesterday in stores, restaurants, gas stations, and online. Home and vehicle purchases as well as normal monthly bills are excluded from this poll.

Americans whose annual household incomes are $90,000 or more had daily spending that averaged $137 in January. This amount remained flat compared to January 2014.

Spending outlook

Economists believe 2015 will bring further spending gains and growth of around 3%. Inflation-adjusted gross domestic product (or GDP) is expected to grow 3% across the four quarters of 2015.

The increase in Americans’ reported spending in January on a year-over-year basis could be a positive sign for casino stocks such as Las Vegas Sands (LVS), MGM Resorts (MGM), Penn National Gaming (PENN), Pinnacle Entertainment (PNK), and Wynn Resorts (WYNN).

An increase would also benefit the VanEck Vectors Gaming ETF (BJK), which has more than 20% exposure to these casino companies. The Consumer Discretionary Select Sector SPDR Fund (XLY) has a broad exposure in the leisure industry.

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