June spending trends: summer spend in full swing
CO-OP Solutions Payments Trends Report (spending data from June 1-30)
RANCHO CUCAMONGA, CA (July 19, 2023) — Summer spending is in full swing, as consumers are making the most of warm weather and lazy days to hit the beach, improve their golf game or spend time with family.
On balance, June’s economic signals were largely positive. Nonfarm payrolls increased by 209,000 in June, less than the 2023 average of 278,000 per month and well behind 2022’s average of nearly 400,00 per month. Yet, unemployment ticked down to 3.6% for the month, and wages rose by 4.4% over the prior year, signs that job seekers still are in the driver’s seat.
Despite this robust wage growth, core inflation rose by only 0.2% in June, and prices were up just 3% from June 2022, a welcome sign for cash-strapped consumers.
These strong economic indicators drove The Conference Board’s Consumer Confidence Index up to 109.7 – a jump of 7.2 over May – showing households’ rising optimism regarding their financial picture.
The Federal Reserve paused its aggressive trend of rate hikes in June, but is poised to initiate further increases beginning in July, albeit at a slower pace through the rest of the year.
Overall, per Co-op spending data, June year over year transaction volume rose by 4.7% in credit and 2.4% in debit.
Co-op’s SmartGrowth team members are closely watching the following key spending trends this month:
- Planes, trains and automobiles: The Travel sector continues to see robust growth in 2023, with the overall category posting transaction volume gains of 12.7% in credit and 7.6% in debit year over year in June.
Although Airline spend has shown more modest increases versus 2022, transaction growth has picked up with the arrival of summer, with month over month gains of 5.2% in credit and 2.5% in debit reflected in June’s data.
Interestingly, despite a sharp decline in gas prices since June 2022’s all-time peak, transaction volume in the Gas category is down in both debit and credit year over year, supporting the view that more consumers are choosing to travel greater distances for vacation, versus the shorter, drivable trips they favored in the immediate wake of the pandemic.
“Lower airline ticket prices, a more favorable economic outlook and consumers’ desire for escape to more remote locales are all contributing to the boom in long-distance leisure travel this summer,” said Beth Phillips, Director, Co-op Solutions. “We expect to see continued strength in the overall travel category through the remainder of the summer season.”
- Summer fun takes focus:Even among families that are forgoing vacation travel this summer, leisure and recreation activities are booming.
The overall Sport/Recreation merchant category was up 2.0% in credit and 4.0% in debit transaction volume year over year, with notable spikes in the sub-categories of Commercial/Professional Sports, Golf Courses and Recreation Vehicle Rental.
Similarly, the Dining & Entertainment category grew by 5.7% in credit and 3.7% in debit, led by transaction volume increases in Arcades, Bars, Caterers, Fast food and Restaurants, Sports/Country Clubs, Theater and Tourist Attractions.
“Consumers are really enjoying their recreational activities this year,” said John Patton, Senior Payments Advisor, Co-op Solutions. “Whether it is hitting the beach or the golf course, credit union members are opening their wallets to maximize the good weather and family time.”
- Home improvement continues recent decline: After a strong spring for the Home Improvement merchant category, transaction volume crumbled like aging sheetrock in June.
The category was down -11.9% in credit and -12.3% in debit month over month in June, putting both into negative territory compared with prior year. Much of this drop was led by the sub-category of Equipment, Parts & Supplies, indicating that the industry has not yet fully recovered from high prices and lingering post-pandemic supply chain issues.
“Slow delivery and high costs of materials are still impacting the home sector,” said Phillips. “In addition, residential real estate sales have slowed considerably due to high mortgage rates, so homeowners are deferring some of these big projects for the time being.”
- Softening job market leads to spike in employment agency spend: Credit transaction volume has accelerated in the Employment Agencies category, rising 65.2% year over year in June. This rise mirrors the recent softening in the job market, and an increase in job seekers pursuing better-paying opportunities. If the economy does tip into recession, expect volume in this category to continue to increase.
- Credit card balance growth slows: Following rapid growth in credit card balances through much of 2022, the trend has decelerated in 2023.
Co-op’s credit union credit portfolio balances were up 14.39% in June 2023 over the prior year, a figure that has slowly declined since hitting a peak growth rate of 15.63% in December 2022.
According to the Wall Street Journal, more U.S. credit card holders are having trouble making monthly payments, a trend that is particularly acute among those with lower credit scores, a group that benefitted strongly from government-issued stimulus checks in the early days of the pandemic.
Year-Over-Year Category Level Spending (Rolling Year Average, and Comparing June 2022 to June 2023)
| |
|
Credit #Transactions |
|
Debit #Transactions |
|
| Category |
|
(Jul’21 – Jun’22) vs (Jul’22 – Jun’23) |
|
Jun’22 vs Jun’23 |
|
(Jul’21 – Jun’22) vs (Jul’22 – Jun’23) |
|
Jun’22 vs Jun’23 |
|
| Agricultural |
|
-1.3% |
|
-4.0% |
|
2.7% |
|
4.3% |
|
| Amazon/Bookstores |
|
20.6% |
|
30.6% |
|
36.4% |
|
68.9% |
|
| Auto |
|
1.6% |
|
3.4% |
|
-2.5% |
|
2.2% |
|
| Auto Dealers |
|
-2.2% |
|
-0.9% |
|
-7.8% |
|
-2.0% |
|
| Auto Services/Parts |
|
0.8% |
|
3.0% |
|
-2.7% |
|
2.1% |
|
| Campers & Camping |
|
-6.5% |
|
-8.7% |
|
-10.9% |
|
-7.8% |
|
| Computers |
|
-11.2% |
|
-20.1% |
|
-13.1% |
|
-19.3% |
|
| Computers |
|
0.1% |
|
5.7% |
|
-1.2% |
|
6.1% |
|
| Services |
|
-17.3% |
|
-32.9% |
|
-17.4% |
|
-28.3% |
|
| Digital Goods |
|
15.3% |
|
18.3% |
|
11.7% |
|
16.3% |
|
| Applications |
|
20.7% |
|
-1.8% |
|
4.1% |
|
-16.2% |
|
| Books, movies, music |
|
-19.4% |
|
-56.3% |
|
-18.0% |
|
-55.9% |
|
| Digital Goods |
|
34.5% |
|
63.7% |
|
28.7% |
|
56.7% |
|
| Games |
|
10.9% |
|
5.3% |
|
1.4% |
|
1.7% |
|
| Marketplaces |
|
43.6% |
|
18.9% |
|
2.4% |
|
8.0% |
|
| Dining & Entertainment |
|
5.6% |
|
5.7% |
|
1.5% |
|
3.7% |
|
| Amusement Parks |
|
4.5% |
|
-6.1% |
|
-1.0% |
|
-10.4% |
|
| Bars |
|
20.7% |
|
14.0% |
|
15.4% |
|
11.4% |
|
| Billiards and bowling |
|
4.4% |
|
-14.8% |
|
-1.0% |
|
-15.6% |
|
| Fast food, Restaurants |
|
4.6% |
|
5.4% |
|
0.1% |
|
2.9% |
|
| Movie Theaters |
|
6.3% |
|
-2.6% |
|
2.4% |
|
-0.7% |
|
| Theater |
|
16.8% |
|
8.5% |
|
11.7% |
|
9.7% |
|
| Tourist Attractions |
|
8.0% |
|
7.7% |
|
1.9% |
|
6.8% |
|
| Education |
|
16.6% |
|
6.8% |
|
16.1% |
|
9.8% |
|
| Financial Services |
|
14.2% |
|
16.3% |
|
4.5% |
|
3.8% |
|
| Professional Services |
|
68.3% |
|
91.7% |
|
99.0% |
|
137.6% |
|
| Quasi Cash – P2P |
|
45.3% |
|
29.4% |
|
241.8% |
|
80.0% |
|
| Furniture |
|
-12.9% |
|
-8.7% |
|
-16.4% |
|
-6.8% |
|
| Gas |
|
3.3% |
|
-0.6% |
|
-2.2% |
|
-2.3% |
|
| Grocery |
|
6.8% |
|
6.5% |
|
0.1% |
|
2.6% |
|
| Home Improvement |
|
-2.5% |
|
-1.6% |
|
-7.7% |
|
-3.8% |
|
| Appliances |
|
-8.9% |
|
-2.9% |
|
-13.3% |
|
-8.0% |
|
| Equipment, parts & supplies |
|
-2.9% |
|
-1.9% |
|
-7.9% |
|
-3.8% |
|
| Materials |
|
12.2% |
|
20.8% |
|
-3.2% |
|
0.2% |
|
| Services / Repair |
|
-5.5% |
|
-7.4% |
|
-12.0% |
|
-17.0% |
|
| Medical |
|
1.4% |
|
1.7% |
|
-3.3% |
|
-0.4% |
|
| Office |
|
-10.2% |
|
-3.5% |
|
-6.7% |
|
-3.5% |
|
| Organizations |
|
2.8% |
|
1.5% |
|
0.4% |
|
-0.5% |
|
| Other |
|
5.2% |
|
4.5% |
|
6.9% |
|
17.7% |
|
| Professional Services |
|
2.1% |
|
4.9% |
|
2.7% |
|
3.1% |
|
| Self-care |
|
9.7% |
|
4.5% |
|
15.0% |
|
33.7% |
|
| Services / Repair |
|
-8.5% |
|
-2.7% |
|
-9.1% |
|
-3.8% |
|
| Pet |
|
0.8% |
|
0.8% |
|
-4.2% |
|
-0.7% |
|
| Professional Services |
|
1.7% |
|
2.5% |
|
-1.1% |
|
3.2% |
|
| Retail |
|
0.3% |
|
1.8% |
|
-5.4% |
|
-0.4% |
|
| Department Stores |
|
-6.5% |
|
1.1% |
|
-10.4% |
|
4.0% |
|
| Discount Stores |
|
14.6% |
|
2.2% |
|
7.6% |
|
-2.0% |
|
| Specialty Retail |
|
-16.3% |
|
-5.4% |
|
-3.1% |
|
-8.4% |
|
| Antique shops |
|
2.1% |
|
5.4% |
|
-4.6% |
|
3.5% |
|
| Florists |
|
-9.2% |
|
-4.6% |
|
-10.4% |
|
-4.8% |
|
| Jewelry |
|
-5.2% |
|
-1.0% |
|
-11.7% |
|
-2.6% |
|
| Other |
|
-18.3% |
|
-6.7% |
|
-3.4% |
|
-9.9% |
|
| Second hand stores |
|
9.1% |
|
8.0% |
|
3.8% |
|
7.1% |
|
| Travel |
|
43.6% |
|
55.9% |
|
30.2% |
|
54.6% |
|
| Sport/Recreation |
|
2.3% |
|
2.0% |
|
0.1% |
|
4.0% |
|
| Bicycle Sales/Service |
|
-3.9% |
|
-2.8% |
|
-2.5% |
|
-4.6% |
|
| Boat Dealers |
|
-8.9% |
|
-6.3% |
|
-17.0% |
|
-8.7% |
|
| Boat Rental |
|
-2.3% |
|
-4.2% |
|
-0.3% |
|
-1.1% |
|
| Commercial/Professional Sports |
|
23.0% |
|
18.2% |
|
11.8% |
|
15.6% |
|
| Golf courses |
|
4.1% |
|
7.0% |
|
1.4% |
|
8.4% |
|
| Recreation Vehicle Rental |
|
1.9% |
|
3.8% |
|
-6.9% |
|
4.2% |
|
| Sport/Recreation |
|
0.6% |
|
-0.3% |
|
-0.4% |
|
3.3% |
|
| Travel |
|
20.4% |
|
12.7% |
|
6.9% |
|
7.6% |
|
| Airline |
|
7.0% |
|
3.9% |
|
-7.6% |
|
0.4% |
|
| Auto Rental |
|
6.1% |
|
6.6% |
|
-1.3% |
|
2.0% |
|
| Cruise |
|
83.3% |
|
41.3% |
|
81.0% |
|
52.1% |
|
| Lodging |
|
1.2% |
|
-3.2% |
|
-11.8% |
|
-6.8% |
|
| Other |
|
50.8% |
|
28.2% |
|
38.8% |
|
29.5% |
|
| Utilities |
|
4.4% |
|
4.3% |
|
-1.5% |
|
0.6% |
|
| Grand Total |
|
4.3% |
|
4.7% |
|
0.1% |
|
2.4% |
|
What Credit Unions Should Do Now
High borrowing rates and ballooning credit balances are taking their toll on consumers’ balance sheets. Credit unions should make sure they are there for their members during their times of economic need. Institutions should review their credit portfolio regularly to identify concerning trends, like late credit card or loan payments, high revolving balances or an increase in checking account overdrafts. Then proactively reach out to those members showing signs of struggle to offer personalized solutions like low-interest balance transfers, skip-a-pay relief and loan consolidation.
With merchant categories like Travel and Sports/Recreation trending up, now is also the time to buff up rewards programs. Credit unions should look to incent members to use their cards at those retailers and spending categories they value most, whether it is online, in store or on the go. Institutions should also consider developing a relationship rewards program to entice members to move their deposit accounts, mortgages, installment loans and other key products to their credit union.
More information on the Co-op SmartGrowth Consulting Team can be found here.
June 2023 Spending Chart
About Co-op Solutions
Co-op Solutions is a credit union-owned financial technology platform built using an industry-leading ecosystem, and whose mission is to connect credit unions to the technology, strategic partnership and scale they need to best serve their members and grow now and into the future. Co-op Solutions partners with credit unions to unlock their potential so they can compete; does the hard work of innovation, creating a one-stop opportunity to help credit unions grow; and offers knowledge and expertise in a world where everything must be integrated. Founded in 1981, Co-op Solutions services 2,650 credit union clients, processes eight billion transactions annually, and manages a nationwide ATM network of more than 30,000 and a 5,700-location shared branch network. For more information, visit www.coop.org.
