ST. PETERSBURG, Fla.—Consumer spending continues to show signs of quickly rebounding according to PSCU’s June Payments Index.
PSCU said updated travel guidance by the CDC and the relaxation of guidelines on social distancing and activities for fully vaccinated Americans are contributing to the rebound, as consumer comfort levels continue to increase, and domestic travel bookings and event attendance are on the rise. The latest study includes a deep dive into Entertainment.
“In this month’s PSCU Payments Index, consumer spending continues to show signs of quickly rebounding, with strong growth rates in May for both debit and credit,” said Brian Scott, SVP, chief growth officer at PSCU. “Fueled with extra money in savings and lower household debt balances, consumers are poised to emerge from the economic downturn far better than economists originally anticipated. Yet with this fast recovery from the pandemic-induced recession, demand is bouncing back faster than supply can keep up – causing shortages and inflationary risk. At the same time, signs of pent-up ‘revenge’ spending continue as consumers increase discretionary spending on larger purchases.”
Key Takeaways
Key takeaways from the June report include, according to PSCU:
- While May CPI-U jumped to an annual rate of 5.0%, its largest increase since 2008, the Federal Reserve is now expecting to raise interest rates during 2023 (versus after 2023). The Fed’s 2021 inflation forecast has also increased by a whole percentage point to 3.4%
- Growth in card payments remains strong, with the entertainment sector returning close to 2019 levels
- With COVID-related restrictions easing, in-person attendance at major sporting events, amusement parks and other events is on the rise, signaling a return to pre-pandemic levels
- As consumer comfort levels with in-store purchases increase, Card Present volume continues to improve – but still significantly trails card not present growth
- Credit card account balances posted a modest improvement in May
- Gasoline purchases are up compared to 2019 levels, fueled by both higher prices at the pump and increased demand as crude oil hit $70 per barrel for the first time in three years
The full report is available for download here.