ST. PETERSBURG, Fla.—The surge of COVID-19 Delta variant has not markedly affected consumers’ spending habits, PSCU is reporting.
According to August edition of the PSCU Payments Index, consumers have grown more accustomed to change over the past 17 months, and the economy continues to demonstrate its resilience.
“While the mix of spend has shifted, overall consumer spending continues to recover and adapt,” PSCU stated.
“Signs of economic recovery continued as consumer spending remained strong throughout July, despite the uncertainty brought forth by the recent surge of the Delta variant,” said Cindy McGinness, vice president, digital experience at PSCU. “While all merchant categories experienced growth, the mix of spend has shifted. In this month’s Deep Dive, we revisit the Restaurant sector where the rebound has been much more pronounced from younger generations, with the largest increase in spending across debit and credit coming from the Gen Z population. These digital natives are also avid users of mobile wallets, which have experienced triple-digit usage growth over the past two years. As many restaurants adopted these digital payment technologies during the pandemic, it increased efficiency and consumer spending across this sector.”
Key Takeaways
According to PSCU, key takeaways from the August report include:
- July CPI-U remained at a 13-year high of 5.4% annually. “Increasing housing costs – including rising rent and home prices – collectively pose a substantial threat to inflation and are being closely watched by both the Fed and the White House. On a positive note, while the annual July CPI-U remained the same from June, the July impact to the annual metric was the smallest in the past 15 months, posting at 0.5%,” PSCU said.
- While no dramatic fluctuations in consumer behavior were seen for the second straight month, consumers remained resilient with strong spending. At the same time, the impact of the Delta variant, along with other economic influences like the stopping and re-starting of government assistance programs, are intersecting to create underlying uncertainty for consumers.
- Restaurants saw purchases up 28% for debit and 26% for credit compared to July 2019. Within the Restaurant sector, the rebound to in-person dining is being met with mixed sentiment, with a much more pronounced return to restaurants among younger generations, PSCU reported. For July, the Gen Z population (ages 18-22) had the biggest increase in spending compared to 2019, with debit purchases up 66% and credit purchases up 72%. Baby Boomers and above showed modest growth, with debit purchases up 5% and credit purchases up 9% compared to 2019.
- Credit card portfolio balances (for our same-store population) in July 2021 held steady, with a 0.2% increase. These balances are down 13% compared to the pre-pandemic July 2019 timeframe, an improvement of 1 percentage point compared to June.
- Card present volume remains steady from June to July for both credit and debit while still trailing card not present growth.
The full report is available for download here.