RANCHO CUCAMONGA, Calif.—Uneasiness about the current economy can be seen in new spending data released by Co-op Solutions, which is reporting most spending categories were off significantly in February.
The depressed spending was not only down from the holiday shopping season, but even from January’s more modest results as well, Co-op Solutions said.
Overall, Co-op spending data reports that February 2023 transaction volume was higher across both the debit and credit portfolios versus February 2022.
According to Co-op, key spending trends:
Back to Basics.
Co-op reported its February month-over-month data shows that consumers are tightening their wallets and hunting for bargains. While higher-end retail categories like Department Stores and Specialty Retail – which includes items like florists, antiques, and jewelry – fell by double digits in February, Discount Stores and Wholesale Grocery declined much more modestly (3-4%).
Moreover, Home Improvement, a high-flier during the pandemic, fell again in February after a precipitous drop in January. This continued downward trend coincides with the period when consumers typically begin to think about investing in home renovations and “sprucing up” in early spring, Co-op said.
Amazon Volume Slides
The biggest month over month declines in Co-op’s February portfolio data were seen in the Amazon/Bookstores category, which fell by -41.7% in debit and -23.9% in credit, off of similar large declines in January, according to the company.
“Despite the recent month-over-month softness in transaction volume, year-over-year Amazon is still up over 15%,” said Beth Phillips, director, Co-op Solutions. “There is this narrative that consumers are waiting for a recession that hasn’t yet arrived, so they are naturally being more cautious with their spending. As consumers focus more on their immediate needs, they are taking a break from their online shopping habits.”
Credit Balances Slip Slightly
Following a year of steadily growing credit portfolio balances, Co-op data showed a modest drop of -0.29% in February 2023, following a -1.53% drop in January. Despite this, credit balances as of February 28, 2023, were still up by 14.42% over February 2022.
“According to data from the New York Fed, credit card balances reached $986 billion in the fourth quarter of 2022, a record high. In addition, the percentage of credit card users making payments 30 days late rose to 5.9%, from 5.2% in the prior quarter,” Co-op noted.
Added John Patton, Co-op senior payments advisor, “The fact is, consumers – and particularly younger consumers – are feeling increasingly stressed financially. Despite a resilient job market, the pressure of high rates, inflation and the depletion of pandemic-era stimulus funds have left families’ cash reserves at their lowest level in years.“
Year-Over-Year Category Level Spending (Comparing February 2022 to February 2023)
More information on the Co-op SmartGrowth Consulting Team can be found here.