The world has had several years of economic upheaval, although the drivers keep changing. Store closures and lost jobs led to heavy government stimulus during the pandemic, leading in turn to accelerating inflation and rising interest rates. Higher costs and disrupted supply chains resulted in shortages and increasing price.

This year has started on a positive note, though, with the S&P 500 hitting an all-time high. Inflation looks like it's moderating, hardly anyone is even talking about a recession anymore, and the Federal Reserve may begin to cut interest rates.

With that multiyear saga in mind, there's one indicator of the economy that almost always suggest what's to come, and it's looking good right now. It's the state of credit card giant Visa (V -0.23%).

Visa powers global payments

It's easy to see how Visa's performance is a strong indication of the global economic state. It processes more volume than any other consumer payments network in the world, with more than $15 trillion in trailing 12-month volume. Throughout its history, Visa's performance has reflected the overall state of spending, which is a key indicator of the economy.

Over the past year, though, it's been telling an interesting story. That's because while inflation in theory makes it harder for many people to spend, Visa's performance has been fine. It's actually been better than fine. And despite the grim prognoses economists were giving last year for a recession, spending has been OK, too.

Visa just updated shareholders with its latest earnings results, for the 2024 first fiscal quarter (ended Dec. 31). Revenue increased 9% over last year, and earnings per share (EPS) were up 20%. It's still benefiting from a return to travel, with cross-border volume up 16%.

More importantly for purposes of understanding what's happening in the economy, payments volume increased 8% year over year. U.S. payments volume was up only 5% over last year, while international payments increased 11%. Management said consumer spending "has remained relatively stable," and holiday spending increased by mid-single digit percentages from the prior year. However, spending on key shopping days was much higher than the year before, and e-commerce spending increased as well.

And it will continue to do so for the foreseeable future

Visa isn't a government agency, and its job isn't to tell economists, shoppers, or analysts what's going to happen next. It's not a perfect indicator, because it doesn't pull and analyze data the way economists or researchers do. But it's much more than mere anecdotal evidence because it's an organic representation of real facts on the ground.

As a public company, Visa has an obligation to provide records of its activities and an interest in telling investors what to expect next for itself. That gives anybody listening a clear view into what might happen with consumer spending in the coming months.

For the 2024 second fiscal quarter, which would coincide with the first three months of 2024, Visa expects similar performance of mid- to high single-digit percentage revenue growth. For the full fiscal year, it's projecting low double-digit percentage growth. That implies stronger growth in the second half of the year.

Visa's performance is directly affected by what else is happening in the economy. If its internal analysts are forecasting higher growth coming in 2024, it's a good sign that it's expecting better overall economic performance.

Visa stock vs. the market

Visa stock has outperformed the S&P 500 for years, partially because it's so correlated to economic forces. The economy grows most of the time, which implies that Visa does, as well. There are plenty of other reasons to love Visa stock. It consistently improves and innovates, positioning itself to maximize its reliable model. And it's incredibly profitable.

As the economy looks like it's getting back to growth, it's a good idea to have some Visa stock in your portfolio.