ST. PETERSBURG, Fla.—Strong consumer purchasing has continued through the peak of the holiday shopping season, with mixed results among the larger retailers amid a shifting tone from the Fed on inflation, PSCU is reporting, citing data from its December PSCU Payments Index.
According to PSCU, key takeaways from the December report:
- Consumer spending remained strong for both credit and debit purchases, with growth in credit outpacing debit as the nation gets further away from the many government COVID-19 relief programs that ended in late summer.
- Goods sector purchases remained strong, with credit up 14.9% and debit up 10.5% for the month of November. “This builds on the solid start to the holiday shopping season in October, in which credit was up 13.6% and debit was up 9.5%. Over the two-month holiday period thus far, consumers have notably resumed in-person shopping, with Goods sector Card Present credit purchases up 20% compared to 2020,” PSCU said.
- “Fed Chief Jerome Powell is no longer using the term ‘transitory’ to describe inflation, which could signal a change to tighten monetary policy – and that higher interest rates could be on the horizon,” PSCU noted, adding that inflation increased again, as the CPI-U for November rose to 6.8%, the largest yearly increase in 39 years.
- The average amount of balance transfers has increased to $3,179 in November from the lowest point in August 2021, up 2.4%. The rate of usage among active accounts has returned to a pre-pandemic cycle and is expected to seasonally peak in the first quarter of each year, with March as the high point.
- The overall credit card delinquency rate is now 53 basis points lower than 2019 results for November, finishing at 1.43%.
- While the unemployment rate fell to 4.2% in November with 210,000 jobs added, this was much lower than the 550,000 jobs that were expected to be added. Sourcing employees and job creation continue to be a concern, PSCU said.
The full report is available for download here