RANCHO CUCAMONGA, Calif.—February spending was flat compared with the prior month, in line with normal seasonal trends, according to PSCU/Co-op Solutions’ newest data.
The company added the data show a “mixed bag of economic results” is causing consumers to take a wait-and-see attitude toward their household spending.
Overall, PSCU/Co-op Solutions credit union portfolio data shows that February transaction volume rose by 6.0% in credit and 1.9% in debit on a rolling 12-month basis, while month over month volumes were down slightly in credit (-1.0%) and up by just 0.4% in debit.
Among the trends PSCU/Co-op Solutions said tis SmartGrowth team is watching, include:
February Events Support Seasonal Upticks in Spending
“February may be the shortest month on the calendar, but it is packed with special occasions that drive seasonal lifts in spending within targeted merchant categories,” the company said. “This year’s Super Bowl was the most-watched NFL championship game in history, with an estimated 123.7 million people tuning in across various platforms. It’s hard to determine the full economic effects of this annual event, but this year it likely fed a 3.6% month-over-month transaction volume lift in the Dining & Entertainment category in Credit, including a 12.1% jump in Caterers.
‘In debit, the category grew by 2.8% for February, including a 14.8% rise in Caterers,” PSCU/Co-op added.
The company further noted there’s a big reason why Florists love Valentine’s Day, and 2024 didn’t disappoint, with this Specialty Retail classification blooming by 85.3% in credit and 92.5% in debit month-over-month. Jewelry merchants rang up more modest lifts of 6.3% and 11.0%, respectively.
“Auto Dealers traditionally use the Presidents’ Day weekend to promote major markdowns on their latest models,” PSCU Co-op Solutions stated. “Holiday sales drove increases in February month-over-month transaction volumes in the Auto category of 6.2% in credit and 5.9% in debit.”
Inflation Continues to Dampen Grocery Spend “Inflation may be gradually easing, but shoppers still face grocery prices that are roughly 19% higher than they were prior to the pandemic,” according to the company. “This is causing budget-conscious consumers to modify their checkout habits, including pivots to generic brands, smaller quantities and discount stores.”
According to Co-op Solutions client portfolio data, transaction volume in the Grocery merchant category is up 7.8% in Credit and 1.9% versus a year ago on a rolling 12-month period. But month-over-month volumes fell in January and February on credit, and dipped by -12.0% in January on debit, before flattening out in February, the analysis added.
“Consumers are pushing back on high prices, causing both producers and stores to make adjustments,” said John Patton, PSCU/Co-op Solutions senior payments advisor. “As long as inflation continues to hit Americans’ pocketbooks, households will scale back their spending to compensate.”
Have Credit Balances Peaked?
“Consumers have been on a credit spending binge for the past few years, but the cumulative impacts of high inflation and stagnating wage growth may have finally given them pause,” PSCU/Co-op said.
According to Co-op Solutions’ credit union client portfolio data, credit balances were 14.15% higher in February 2024 compared with the year prior, continuing a trend of year-over-year balance growth dating back to January 2022. But it was also the first time since February 2023 that aggregate portfolio balances fell month-over-month, dropping -3.22% from January 2024.
“Although transaction volume on credit is up by 6.0% year-over-year on a rolling basis, it has fallen for the past two months,” said Ryan Prentice, director, SmartGrowth consulting services at PSCU/Co-op Solutions. “This indicates that credit union members are approaching their borrowing limits, and will likely continue shifting back to Debit as we move further into 2024.”
Year-Over-Year Category Level Spending (Rolling Year Average, and Comparing February 2023 to February 2024)
Additional information is available here.
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