RANCHO CUCAMONGA, Calif.—Both credit and debit spending were down for consumers in November, Co-op Solutions payments data show, with the company saying it has identified three trends in its analysis, including some surprises.
Overall, credit spending was down 4.7% for the month, while debit declined by 2.7%.
Co-op said the three key spending trends its SmartGrowth Team is following include:
Consumers Seek Out Deals Amid Strong Holiday Shopping Volume
Despite inflationary pressures, retailers enjoyed strong Black Friday results, with a bigger than expected year over year increase of 2.3% in online sales for the crucial holiday shopping weekend, Co-op said.
According to the company’s analysis of client credit union portfolio data for Department Stores, Discounts Stores, Retail, Specialty Retail, Wholesale and Amazon merchant categories, there were solid increases in November compared with the same month in 2021, with increases in transaction amount and count across both debit and credit in all these categories.
Co-op noted these results are consistent with the National Retail Federation’s forecast of between 6% and 8% growth in holiday sales over 2021, and reflect a strong bounce back for debit spending, following two months of negative growth compared with 2021.
“As in years past, holiday shoppers are still all about the deals,” said Beth Phillips, director, Co-op Solutions. “However, they are shifting away from department stores and other legacy retailers in favor of Amazon, wholesale and discount merchants in search of the best sales. In another blow to traditional stores, those consumers looking for more personalized gifts and holiday shopping ‘experiences’ are now shopping at specialty or local merchants.”
Credit Use Continues Long-Term Climb
According to Co-op, consumers’ growing appetite for discounts and deals is not holding them back from spending on credit.
To the contrary, the company said, U.S. credit card debt posted a new record in the third quarter, reaching $930 billion for the first time. However, Co-op said its data also showed month over month declines in both debit and credit for the month.
“Even though we are tracking relatively higher spending on debit in recent months, the long-term trend over the past year has been an increase in credit use,” said John Patton, senior payments advisor. “Most holiday spending has been on credit, whereas consumers are trying to use debit and cash on hand to manage their weekly budgets.”
Discretionary Spending Volume Declines
Co-op noted a “surprising” trend for the month is several categories showed significant transaction count declines versus October, with Dining & Entertainment down by 7.5% in debit and 10% in credit, and Travel down a similar 8.5% in Debit and 10.5% in credit.
Within the Travel category, only Auto Rental debit transactions showed growth for the month, Co-op reported.
“What we’re beginning to see play out is consumers being more frugal with their spending,” said Phillips. “Conserving resources for necessities like rent, utilities, gas and groceries, while holding back on discretionary spending is very typical recessionary spending behavior.”
Month-Over-Month Category-Level Spending (Comparing November 2022 to October 2022)