Commercial Spending in US Tops $16 Trillion in 2005, Up More than Eight Percent Over 2004 Spending

SAN FRANCISCO--(BUSINESS WIRE)--Feb. 8, 2006--Estimated commercial spending in the United States rose to $16.3 trillion in 2005 up from $15.06 trillion in 2004, an increase of 8.2 percent, according to the Commercial Consumption Expenditure(TM) (CCE) Index produced by Visa USA. The CCE analysis segments spending by four primary business sectors: small business at $4.7 trillion (29 percent), mid-sized companies at $3.3 trillion (20 percent), large companies at $7.2 trillion (44 percent), and government agency spending at $1.1 trillion (7 percent). Forecast estimates derived from the CCE analysis project that commercial spending will reach $17.4 trillion in 2006 and $17.9 trillion by 2007.

"We are encouraged to see that commercial spending remained strong in 2005 and we expect moderate spending growth to continue through 2007 and beyond," said Wayne Best, senior vice president and chief economist for Visa USA. "While 2007 will likely see spending growth slow in some sectors based on CCE estimates, such as construction, we expect overall commercial spending this year to increase by approximately six percent."

Small Business Spending

According to CCE estimates, small business spending grew 5.4 percent in 2005 to $4.7 trillion with growth expected to slow slightly to 4.3 percent and reach $4.9 trillion in 2006. Estimates for 2005 indicate that more than half (54 percent) of small business spending was in the following top five expenditure categories:

-- Raw materials/manufactured goods $800 billion (17 percent)
-- Professional services $541 billion (11 percent)
-- Rent $412 billion (9 percent)
-- Personnel supply services $404 billion (9 percent)
-- Other business spending $370 billion (8 percent)

The top five industries representing 62 percent of total small business spending are:

-- Retail trade $913 billion (20 percent)
-- Wholesale trade $621 billion (13 percent)
-- Manufacturing $530 billion (11 percent)
-- Construction $419 billion (9 percent)
-- Real estate/rental/leasing $412 billion (9 percent)

"The CCE Index and the segmentation analysis of commercial spending provides valuable information to Visa member financial institutions and helps them better serve their commercial and small business clients," said Darren Parslow, division head of Visa Commercial Solutions. "This information, along with Visa's comprehensive suite of commercial payment products, helps businesses of all sizes more efficiently manage their commercial payments."

Mid-sized Companies

CCE analyzed estimated spending by mid-sized companies for the first time in 2005 and found that it grew the fastest among all business sectors at 10.5 percent to $3.3 trillion, with growth expected to moderate to 8.4 percent and reach $3.6 trillion in 2006. Estimates for 2005 indicate that 59 percent of commercial spending by middle market companies was in the following top five expenditure categories:

-- Personnel supply services $450 billion (14 percent)
-- Rent $385 billion (12 percent)
-- Other business spending $376 billion (11 percent)
-- Professional services $374 billion (11 percent)
-- Raw materials/manufactured goods $361 billion (11 percent)

The top five industries representing 73 percent of total middle market spending are:

-- Wholesale trade $686 billion (21 percent)
-- Manufacturing $683 billion (21 percent)
-- Retail trade $679 billion (20 percent)
-- Healthcare $199 billion (6 percent)
-- Construction $162 billion (5 percent)

Large Company Spending

Large companies represent the largest share of estimated CCE spending at $7.2 trillion, which grew by 9.8 percent in 2005. Spending growth in this sector is expected to be 8.1 percent and reach $7.8 trillion in 2006. Estimates for 2005 indicate that 50 percent of large market company spending was in the following top five expenditure categories:

-- Raw materials/manufactured goods $1.20 trillion (17 percent)
-- Other core business services $829 billion (11 percent)
-- Professional services $562 billion (8 percent)
-- Personnel supply services $525 billion (7 percent)
-- Insurance $496 billion (7 percent)

The top five industries representing 80 percent of total large market spending are:

-- Manufacturing $1.95 trillion (27 percent)
-- Wholesale trade $1.62 trillion (23 percent)
-- Retail trade $1.18 trillion (16 percent)
-- Finance/insurance $555 billion (8 percent)
-- Information $473 billion (6 percent)

Government Agency Spending

The smallest segment of CCE at $1.1 trillion in estimated spending for 2005, government agency expenditures also grew at the slowest annual rate among the business sectors at 4.2 percent. Growth in government spending is expected to be 3.9 percent and reach $1.2 trillion in 2006. Estimates for 2005 indicate that nearly half (46 percent) of government spending was for the following top five expenditures:

-- Raw materials/manufactured goods $168 billion (15 percent)
-- Professional services $105 billion (10 percent)
-- Personnel supply services $98 billion (9 percent)
-- Other core business services $82 billion (7 percent)
-- Computers/office equipment $80 billion (7 percent)

The Visa CCE index includes all commercial spending with the exception of payroll and other select larger capital expenditures. CCE utilizes government data sources and research methods similar to the Personal Consumption Expenditure (PCE) index that annually monitors consumer-related spending. By using the same source of measures from the Bureau of Economic Analysis (BEA) and the Census Bureau, in addition to proprietary data analysis provided by Global Insight (USA) Inc., CCE offers an unbiased and consistent way to monitor business expenditures in the United States with comparable methodology used for global spending. The CCE index defines small businesses as those with $25 million or less in annual revenues, mid-size companies are defined as $25 - $500 million in annual revenues and large companies are defined as those with annual revenues over $500 million.

About Visa Commercial Solutions

Visa offers small businesses, middle market companies, large corporations and government agencies trusted, reliable solutions that meet their many commercial payment needs - for virtually any purchase type, any situation or any business process. These capabilities help businesses and government agencies streamline operations, reduce overall costs and improve cash flow for better management of their payment processes. Visa's commercial solutions offer a great way for businesses and the public sector to pay and be paid. For more information about Visa's commercial business, please visit www.visa.com/commercial.

About Visa USA

Visa USA is the nation's leading payment brand and largest payment system, enabling banks to provide their consumers and business customers with a wide variety of payment alternatives tailored to meet their evolving needs. Visa USA is committed to increasing the choice, convenience, acceptance and security of Visa payments for all stakeholders in the payment system - members, cardholders and merchants. Through its 13,420 member financial institutions, more than 488 million Visa-branded cards have been issued to cardholders in the United States. Last year, U.S.-based financial institutions relied on Visa's processing system, VisaNet, to facilitate $1.3 trillion in transactions with unparalleled reliability.

Worldwide, cardholders in more than 150 countries carry more than 1 billion Visa-branded cards, accounting for more than $3 trillion in annual transaction volume.

Visa offers a trusted, reliable and convenient way to access and mobilize financial resources - anytime, anywhere, anyway.

Note to editors:

Complementary Global CCE Data Available

Visa International is also providing global CCE data which includes commercial spending estimates and forecasts for Visa's six global regions (AP, Canada, CEMEA, Europe, LAC, and US). For more information please visit the newsroom at www.corporate.visa.com.

Contacts
For Visa USA
Jennifer Doidge, 415-932-2350
jdoidge@visa.com
or
Kenny Thomas, 415-932-2185