What: In the US, the extreme storm season has left its mark on spending power and retail.

Why it is important: Expect this kind of impact to generalize accross the board.

In April, Visa's U.S. Spending Momentum Index (SMI) saw a significant drop of 4.8 points month-over-month, settling at 93.8, which is below the critical 100-point mark indicating broad-based consumer spending expansion. This decline marks a departure from two months of robust growth and was influenced heavily by severe weather conditions, including an unusual spike in tornado activity, with 300 recorded tornadoes making it the second highest for any April on record. The adverse weather substantially reduced consumer mobility, directly impacting spending habits across all categories.

Economic factors also played a role in this spending slowdown. Job growth in April decreased with only 175,000 new jobs added, a notable reduction from March's 315,000. Wage increases also slowed, with nominal gains rising by just 0.2 percent compared to 0.4 percent in the previous month. Additionally, a significant increase in gas prices, which rose 5.4 percent month-over-month and 17 percent since the year's start, further strained consumer budgets. This financial pressure led to cutbacks in essential spending, such as groceries, significantly impacting the non-discretionary SMI.

The culmination of slower job and wage growth, along with rising energy costs and severe weather, contributed to a sharp decline in consumer confidence, reaching a 21-month low in April. This decline in confidence likely spurred consumers to reduce discretionary spending, further driving down the discretionary SMI.

In the US, extreme weather now has a visible impact on retail