What: Rising gasoline and energy costs pushed U.S. spending momentum below expansion territory in July, squeezing discretionary categories while restaurant spending improved.

Why it is important: Visa’s index underlines how real-time spending data can help retailers detect early demand shifts and adjust pricing, inventory and promotions before sales weaken further.

Visa’s July 2026 U.S. Spending Momentum Index fell 2.7 points month on month to 98.6, ending four consecutive months of growth and moving below expansion territory. The slowdown was driven mainly by weaker discretionary spending, which dropped 3.6 points to 95.7, its lowest level since February 2025. Higher gasoline and energy prices appear to have squeezed household budgets, reducing momentum in categories such as fashion, department stores, luxury, home goods, travel and entertainment. Non-discretionary spending also softened, suggesting more consumers may be trading down to lower-cost grocery and essential products. All four U.S. regions recorded declines, with the Northeast and West hit hardest by elevated gas prices and inflation. Restaurants were the exception, with momentum rising 1.9 points, likely supported by World Cup knockout-stage gatherings and persistent food-away-from-home inflation. The data shows how real-time payment insights can help retailers detect demand shifts and adjust pricing, inventory and promotions quickly.

IADS Notes: Visa’s July 2026 U.S. Spending Momentum Index confirms that consumer resilience is weakening as energy costs, inflation and affordability pressures squeeze discretionary demand. Reuters (June 2026) directly links rising gas prices, geopolitical instability and inflation to a larger consumer stress test for US retailers, especially in discretionary categories. Visa (September 2025), Visa (January 2026), Visa (December 2025) and Visa (March 2026) provide the broader spending context, showing that US consumers remained resilient through 2025 but became increasingly divided by income, employment concerns, affordability pressure and geopolitical uncertainty. Bloomberg (July 2026) shows how gasoline prices can distort headline retail sales and shift purchasing power across online, discretionary and restaurant categories. Financial Times (May 2026) adds that fading tax rebates are reducing disposable income and pushing shoppers toward value. Restaurant Dive (March 2026) shows that consumers are prioritising essentials and dining experiences while becoming more selective on discretionary purchases, which aligns with Visa’s July finding that restaurant momentum improved even as discretionary spending fell. The Economist (December 2025), The Wall Street Journal (March 2026) and Alix Partners (December 2025) reinforce the same pattern: weak sentiment, inflation, trade-down behaviour and operational caution are reshaping retail planning. BCG (July 2026) provides a North American comparison, showing that headline spending can mask household fragility, borrowing pressure and value-seeking behaviour. Together, these sources show that retailers must plan for a more selective consumer, where energy shocks, regional inflation and event-driven spending can quickly redirect demand across categories.

In the US, discretionary spending momentum falls to its lowest level in more than a year