ST. PETERSBURG, Fla.--Consumer purchasing activity remained strong in June and credit card spending continued to outpaced debit, PSCU reported.
“While overall consumer spending remained strong throughout June, current inflationary pressures are keeping growth in purchases outpacing growth in transactions. With another record Consumer Price Index increase announced this month, the Federal Reserve is under continued significant pressure to tame soaring inflation,” said Brian Scott, SVP, chief growth officer, PSCU. “In this month’s Deep Dive, we explore the Travel and Entertainment sectors where spending has rebounded over the past year – but is beginning to soften, signaling a potential slowdown in discretionary spending amid the rising threat of an impending recession.”
Key takeaways from the July edition of the PSCU Payments Index:
- Consumer spending on cards remained strong, with credit purchases up 16% and debit purchases up 7% year over year. Current inflationary pressures are keeping growth in purchases outpacing growth in transactions. For June, growth in overall credit transactions were up 12% and debit transactions were up 3%
- The Consumer Price Index (CPI-U) increased on an annual basis to 9.1% in June, which was a 1.3% increase from May and heightens the pressure on the Fed to reign in the highest level of inflation since 1981. The Fed will meet on July 26-27 to evaluate future interest rate hikes with the hopes of creating a soft landing from inflation and ultimately avoiding a recession
- While discretionary spending in the Travel and Entertainment sectors remains strong with year-over-year credit purchases up 26% and debit purchases up 7% for the combined sectors, transaction growth is now an important metric to watch, looking beyond the inflationary impacts to understand shifting consumer trends. For June, transaction growth for the overall Travel and Entertainment sectors was up 26% on credit and up 19% on debit as compared to June 2021. Notable transaction growth within this grouping includes movie theaters (up 147% for credit and up 96% for debit) and air travel with non-U.S.-based carriers (transactions up 104% for credit and 42% for debit). Transaction growth for U.S.-based airlines was down 1% on credit and down 20% on debit, all compared to June 2021.
- The average credit card balance for June 2022 was $2,733, up 3.5% (or $93) year over year. June marked the fourth consecutive month in which year-over-year growth was over 2%. The credit card delinquency rate for June was 1.54%, 20 basis points lower than pre-pandemic June 2019 levels.
The full report is available for download here.