Our spending sometimes predicts the future Credit:Michel O'Sullivan A Mastercard "market insights" specialist, Sarah Quinlan​, was able to reel off a list of things that spending data can foretell when I interviewed her recently. One example is the purchase of new car tyres and repairs. When spending on those two things falls sharply it's a sure sign a surge in new car sales is on the way. That's because people are much less likely to replace tyres or have repairs done when they are planning to buy a new car. Quinlan saw this pattern in America recently. Spending on new tyres and repairs fell prior to 2015 and, sure enough, new car sales surged to a 15-year peak last year. The opposite is also true – strong growth in spending on new tyres and car repairs signals tougher times ahead for new car dealers.

Mastercard has found increased travel spending – on things such as airline tickets and hotels – is a powerful precursor of an upswing in the economy. "Travel is the ultimate in discretionary spending so when we see an increase we know that recovery is ingrained," said Quinlan. Spending on furniture is another reliable indicator of greater strength in the overall economy. "You can really delve into this data to see future trends," said Quinlan. Mastercard says its data foreshadows a downturn in Australia's property market because of a marked slowdown in spending on household goods such as hardware, furnishings and appliances. In other countries where Mastercard tracks spending that has been a reliable "precursor" of a weakening housing sector. This trend first appeared in July last year and by December there were signs the housing market was beginning to cool. Quinlan says the shift in household spending trend suggests further weakness in the property market is likely.

Sometimes shock events have a big effect on our spending patterns. When the global financial crisis took hold in September 2008 Australian households immediately started saving a much bigger proportion of their incomes. The household savings ratio shot up from around zero to above 10 per cent – the highest proportion in decades. Even now, more than seven years after the crisis, the savings ratio is still quite high. Card companies are also using their data to get a deeper understanding of how consumers react to events. Mastercard has identified an interesting shift in discretionary spending, at least in America, since the global financial crisis. The data suggests people now have a greater preference to spend on memorable experiences rather than goods. "There's a growing desire to spend on things like dining out, travel or a concert," said Quinlan. Stock market gyrations often trigger a drop in consumer sentiment but Mastercard has found that when it comes to spending, the most pronounced impact is on luxury goods. That's because the biggest consumers of luxury goods – wealthy shareholders – are directly affected by share market volatility.

"The more volatility in the equity market the more likely we'll see a downturn in luxury spending," said Quinlan. "And, by the way, the effect extends to the top 10 per cent of dining as well – it's not just jewellery and shoes." I wonder what else Mastercard will be able to see in its crystal ball as electronic payments become even more prevalent?