First things first: there is no such thing as a sure-fire predictor of anything except heat in the summer and rain in the winter (in California at least). And when it comes to the two-steps-forward-one-step-back recovery from the Great Recession of 2008, our consumer-driven economy sometimes seems like a stumble-drunk in the dark. However, barring another shock to the global financial markets (say for example, Greece bailing on the Euro or Portugal defaulting – just to name a couple of problems completely beyond most consumers’ radar screens), the long cycle towards recovery continues.

There were a couple of news items last week that reminded me of days past, and the story is worth repeating, since it’s about the most reliable metric that the retailer that I worked for had for how a day, week, or quarter was shaping up. Simply stated, the metric was credit/debit card volume.

First, the News

Last week, the U.S. Dept. of Commerce reported that U.S. household purchases, which account for about 70 percent of the economy, rose at a 2.7 percent pace in the first quarter. But on May 5^th, VISA posted a 24% increase in profits, driven by worldwide spending on Visa debit and credit cards that advanced 13 percent to $861 billion. That includes purchases in the U.S. that climbed 12 percent to $477 billion, 12 percent to $230 billion in the Asia-Pacific region, and 26 percent to $77 billion in Latin America and the Caribbean (according to Visa’s press release).

Visa wasn’t alone. Last week MasterCard reported that its first-quarter profit also rose 24 percent. Both Visa and Mastercard beat stock analyst expectations, and saw a respectable jump in their stock prices as a result. Both companies attributed the rise to consumers beginning to spend on things that go beyond the basics. For example, both companies reported significant increases in cross-border business — a sign that consumers are beginning to travel outside their home countries on vacation.

The Old Story

Like most retailers, my company obsessed about daily performance. It only took one bad day to wreck a retail week, and only one bad week to wreck a quarter. And we knew that for the rest of the year, we’d be pushing hard to make up the difference between our expectations as stated to the financial community and actual performance. So we were constantly staring at the equivalent of tea-leaves to get a sense of whether we were in trouble or not (this by the way is the best problem statement to justify investment in business intelligence capabilities: it would let the executive team breathe again).

Like most retailers at the time, we depended on flash sales, which really weren’t all that flash – they were summarized and delivered to the Operating Committee members the morning after close of business the day before. But the cash management department discovered something really interesting. The performance of any given day compared to plan could be gauged intra-day by looking at credit/debit card volumes coming through our centralized transaction switch. The traffic volume pattern on the “Stratus” (the type of computer that housed our electronic payment switch software) was remarkably steady; most retailers would recognize the famous double-humped curve showing the peaks and valleys of intra-day performance. The volume of electronic payments as a total of all transactions was also very stable – after all, for consumers old habits die hard, even how they pay for purchases. The only real variable was the starting point on the y axis of the performance chart (x= time of day, y=$). Once we knew that (for example, at 10 AM looking back from the start of day), we pretty much knew how the day was going to play out.

From the Specific to the General

Of course, retailers will continue to look for any sign that they can find that will help them to respond quickly to changes in the market. RSR has frequently opined on the need for more and better metrics as well as the need for real-time operationalized business intelligence capabilities – and we stand by our recommendations (which you can find in virtually every one of our research reports). But the bigger news that affects us all is that people are indeed slowly but surely beginning to engage in discretionary spending again. There’s been a lot of discussion about the new normal, an age of post-recession frugality. I’m not so sure that there’s been any great shift in consumer attitudes however. It seems simpler than that: people spend when they have money, and don’t when they don’t.

The big card networks are guardedly optimistic about the recovery. Retailers should watch their success to get a preview of their own chances. Better yet: implement daily or even intra-day performance metrics that monitor electronic payment traffic — to reduce the lag time to action. While nothing is surefire, it worked for my company and might work for yours.