January spending trends: Post-holiday lull belies strong year-over-year credit growth
PSCU/Co-op Solutions SmartGrowth Team Payments Trends Report (Spending Data from January 1-30)
ST. PETERSBURG, FL (February 20, 2024) — January spending fell as expected following a strong holiday shopping season, as a strengthening economy is helping to boost consumer confidence in the new year.
Inflation cooled slightly in January, but less than consensus estimates as the consumer price index rose by 0.3% for the month, or 3.1% on a 12-month basis (down from a rate of 3.4% in December). The biggest jump in prices came from shelter costs, which rose by 6% year-over-year.
Total nonfarm payrolls grew by 353,000 in January, leaving the unemployment rate steady at 3.7%. The largest job gains were seen in the professional and business services, health care, retail trade and social assistance sectors.
Citing moderating inflation and steady job growth, the Federal Open Market Committee (FOMC) held off on raising its benchmark lending rate at its January 31 meeting. However, the FOMC stated it is not yet ready to begin cutting rates until inflation has moved closer to its 2% target.
Amid this mostly rosy economic outlook, consumer confidence continues to rise. The Conference Board’s Consumer Confidence Index rose for the third straight month in January, reaching 114.8 versus a revised 108.0 in December. This was the highest confidence rating since December 2021. According to the Conference Board’s chief economist Dana Peterson, “January’s increase in consumer confidence likely reflected slower inflation, anticipation of lower interest rates ahead and generally favorable employment conditions as companies continue to hoard labor.” Confidence increased across all income groups except for households earning $125,000 and above.
Overall, Co-op credit union portfolio data shows that January transaction volume rose by 5.5% in Credit and 1.7% in Debit on a rolling 12-month basis, while month over month volumes were down by -8.8% and -11.1%, respectively.
The Co-op SmartGrowth Team members are closely watching the following key spending trends this month:
- Monthly transaction volume falls due to seasonal factors.January typically shows declines in both Debit and Credit volume, as online and in-store traffic slows down following the busiest shopping season of the year. In addition, consumers tend to use the gift cards they received over the holidays for discretionary spending in the first quarter of the year – activity that doesn’t show up in Credit and Debit transaction volume reports.
In accordance with this historical trend, January 2024 Credit transaction volume fell by -8.8%, and Debit dropped by -11.1% from December 2023.
Although overall results were down, double-digit increases were seen in the Campers & Camping (up 39.3% in Credit and 18.1% in Debit) and Education (up 24.2% in Credit and 18.6% in Debit) merchant categories. Although the overall Travel category was flat for the month, Cruise volume showed strong month over month growth (26.9% on Credit and 13.6% on Debit).
- Credit outpaces debit year over year.On a rolling 12-month basis, Credit transaction volume was up 5.5% in January. Comparing January 2024 to January 2023 the lift was even larger, with Credit transaction volume up 8.4% for the month.
In contrast, Debit transaction volume remained flat with a 1.7% increase on a 12-month rolling basis, and just an 0.8% lift over January 2023.
“Despite the improving economic outlook, consumer households are feeling cash-strapped,” said Ryan Prentice, Director, SmartGrowth Consulting Services at Co-op. “A combination of factors has impacted their financial wellness over this past year, including rising inflation and interest rates, coupled with the depletion of their savings from pandemic-era government incentives. This is driving members to use Credit for more non-discretionary purchases, and even for everyday spending.”
- Digital goods show big gains.Digital goods have proven to be one of the biggest success stories of the past year. This category, which is comprised of products sold in digital form, such as musical albums or songs, movies, eBooks, apps and games, showed strong year-over-year growth in both Credit and Debit.
According to Co-op client portfolio data, the overall Digital Goods merchant category rose 24.1% in Credit and 19.9% in Debit on a rolling 12-month basis. Interestingly, the subcategory of Books, Movies and Music showed a sharp decline across both portfolios, perhaps signaling that consumers are growing more comfortable consuming these forms of entertainment and media either through subscription streaming services (which are not included in Digital Goods), or in the theater and at live venues.
“These results show that members are continuing to migrate toward the digital realm for many of their needs,” said John Patton, Co-op Senior Payments Advisor. “Whether its apps, games or digital marketplaces, the consumer loves the convenience of their mobile device, and this category is only going to continue to grow.”
Year-Over-Year Category Level Spending (Rolling Year Average, and Comparing January 2023 to January 2024)
| |
|
Credit #Transactions |
|
Debit #Transactions |
|
| Category |
|
(Feb’22 – Jan’23) vs (Feb’23 – Jan’24) |
|
Jan’23 vs Jan’24 |
|
(Feb’22 – Jan’23) vs (Feb’23 – Jan’24) |
|
Jan’23 vs Jan’24 |
|
| Agricultural |
|
-4.2% |
|
-0.8% |
|
-1.7% |
|
-8.4% |
|
| Amazon/Bookstores |
|
14.5% |
|
-3.7% |
|
26.4% |
|
-2.5% |
|
| Auto |
|
3.1% |
|
4.8% |
|
-0.1% |
|
0.9% |
|
| Electric Vehicle Charging |
|
91.9% |
|
85.3% |
|
112.7% |
|
111.8% |
|
| Campers & Camping |
|
-10.0% |
|
-15.4% |
|
-13.3% |
|
-18.6% |
|
| Computers |
|
-3.1% |
|
19.7% |
|
-10.3% |
|
-4.4% |
|
| Digital Goods |
|
24.1% |
|
26.3% |
|
19.9% |
|
22.0% |
|
| Applications |
|
3.8% |
|
19.0% |
|
-6.7% |
|
19.0% |
|
| Books, movies, music |
|
-53.4% |
|
-38.9% |
|
-54.0% |
|
-42.7% |
|
| Digital Goods |
|
68.9% |
|
51.0% |
|
56.1% |
|
40.2% |
|
| Games |
|
15.7% |
|
23.3% |
|
15.8% |
|
30.5% |
|
| Marketplaces |
|
9.1% |
|
-2.7% |
|
12.5% |
|
21.5% |
|
| Dining & Entertainment |
|
5.5% |
|
4.1% |
|
2.4% |
|
-0.5% |
|
| Government lottery tickets |
|
137.0% |
|
116.0% |
|
45.0% |
|
107.7% |
|
| Government/gambling |
|
57.5% |
|
50.5% |
|
52.8% |
|
28.0% |
|
| Movie Theaters |
|
10.9% |
|
-4.0% |
|
7.5% |
|
-4.5% |
|
| Other |
|
9.1% |
|
-2.7% |
|
3.1% |
|
-9.7% |
|
| Sports/Country Clubs |
|
8.6% |
|
9.9% |
|
4.6% |
|
1.9% |
|
| Theater |
|
10.0% |
|
3.7% |
|
5.3% |
|
-5.4% |
|
| Tourist Attractions |
|
5.6% |
|
-0.8% |
|
2.9% |
|
-9.3% |
|
| Education |
|
6.8% |
|
1.7% |
|
8.1% |
|
-0.3% |
|
| Financial Services |
|
15.4% |
|
16.6% |
|
3.6% |
|
3.0% |
|
| Furniture |
|
-11.6% |
|
-10.6% |
|
-15.4% |
|
-19.3% |
|
| Gas |
|
1.8% |
|
5.6% |
|
-1.9% |
|
-3.4% |
|
| Grocery |
|
7.1% |
|
14.1% |
|
1.7% |
|
1.4% |
|
| Home Improvement |
|
-1.3% |
|
4.0% |
|
-5.0% |
|
-3.9% |
|
| Medical |
|
3.2% |
|
10.0% |
|
-1.5% |
|
-1.5% |
|
| Office |
|
-0.9% |
|
1.8% |
|
-4.3% |
|
-6.1% |
|
| Organizations |
|
3.1% |
|
13.5% |
|
0.7% |
|
5.7% |
|
| Other |
|
5.6% |
|
6.5% |
|
14.7% |
|
15.2% |
|
| Pet |
|
0.5% |
|
2.6% |
|
-3.1% |
|
-6.0% |
|
| Professional Services |
|
3.2% |
|
5.8% |
|
3.5% |
|
4.7% |
|
| Retail |
|
3.0% |
|
11.5% |
|
-0.5% |
|
0.7% |
|
| Specialty Retail |
|
-4.9% |
|
1.6% |
|
-8.8% |
|
-6.5% |
|
| Sport/Recreation |
|
1.7% |
|
1.7% |
|
-0.2% |
|
-5.1% |
|
| Travel |
|
13.6% |
|
14.0% |
|
7.0% |
|
6.0% |
|
| Utilities |
|
4.6% |
|
8.2% |
|
1.2% |
|
3.6% |
|
| Grand Total |
|
5.5% |
|
8.4% |
|
1.7% |
|
0.8% |
About PSCU
PSCU/Co-op Solutions is the nation’s premier payments credit union service organization (CUSO) and an integrated financial technology solutions provider. With over four decades of industry experience and a commitment to service excellence and innovation, the company serves more than 4,000 financial institutions throughout North America. PSCU/Co-op Solutions leverages its expertise and resources on behalf of credit unions and their members, offering an end-to-end product portfolio that includes payment processing, fraud and risk management, data and analytics, digital banking, instant payments, strategic consulting, collections, ATM and POS networks, shared branching and 24/7/365 member support via its contact centers. For more information, visit pscu.com and coop.org.
