Press

The Velera Payments Index: May 2024

ST. PETERSBURG, FL (May 16, 2024) — Today, Velera – formerly PSCU/Co-op Solutions, the nation’s premier payments CUSO and an integrated financial technology solutions provider – published the May edition of the Velera Payments Index, the goal of which is to provide information and insights to help financial institutions navigate the evolving financial landscape to make informed, strategic decisions for their organizations and members.

Growth in consumer spending was modest in April, aligning with slowing economic indicators that could stimulate Fed rate cuts later this year. In our May 2024 edition of the Velera Payments Index, we revisit a Deep Dive into Overall Food, which includes groceries and dining out – and provides additional context for inflationary impacts on non-discretionary spending.

The Consumer Confidence Index dropped in April to 97.0 from a downwardly revised March result of 103.1. While there have been three months of decline, the index has maintained a relatively narrow window for the past two years. The University of Michigan Index of Consumer Sentiment decreased 10 points to 67.4 for May, following stable results since January within a 2.5-point range. The drop in sentiment spanned all age groups, income levels and education levels. Concerns in the coming year were identified with inflation, unemployment and interest rates.

Job growth slowed more than economists expected in April with 175,000 jobs created – well below the March jobs number at 315,000. The U.S. Bureau of Labor Statistics (BLS) reported the overall unemployment rate for April ticked up to 3.9%, or 6.5 million people. Job gains occurred in healthcare, social assistance and transportation & warehousing.

In the Labor Department’s May 15 update, the Consumer Price Index (CPI) increased 0.3% in April, bringing the 12-month rate of inflation to 3.4%. Shelter and Gasoline contributed to more than 70% of the increase when combined. Core CPI, which excludes the Food and Energy sectors, was 0.3% for April and rose 3.6% year over year – the smallest increase since April 2021.

With the softened job report in April and marginally lower inflation, the slowdown in the economy may finally be here. After the Federal Reserve decided to hold interest rates steady in their May meeting, it indicated that the FOMC does not anticipate a rate cut until there is confidence that inflation is moving sustainably downward, which may not be until late summer. The next Federal Open Market Committee (FOMC) meetings conclude on June 12.

“As overall inflation continues trending downward, consumer spending growth remained at modest levels in April,” said Norm Patrick, Vice President, Advisors Plus Consulting at Velera. “In this month’s Deep Dive into the Overall Food sector, we see grocery store spending maintaining the largest allocation of spend across both credit and debit. With stubbornly high grocery and restaurant prices remaining elevated, food costs continue to eat up the highest percentage of household budgets in more than 30 years.”

A sampling of key takeaways from April includes:

  • For April, growth rates were positive, but only up modestly year over year.  Debit purchases were up 3.2% and credit purchases were up 1.1%. Debit transactions were up 2.7% and credit transactions were up 2.2% year over year.
  • The Consumer Price Index (CPI-U) increased 0.3% in April, while the 12-month rate of inflation was 3.4%. Shelter and Gasoline again contributed to more than 70% of the increase. Excluding the volatile Energy and Food sectors, the core CPI index increased 0.3% from March, putting the 12-month Core CPI index at 3.6%.
  • While there was positive growth in Overall Food purchases (up 1.8% for credit and up 2.5% for debit), consumers are spending slightly less on average in the Grocery Store & Supermarkets segment, which represents the largest portion of Overall Food. The average credit purchase at Supermarkets was $52.98, down 1.6% year to date compared to 2023. The average debit supermarket purchase was $52.09, down 0.5% for the same period.
  • For April, total balance transfer dollars were more in line with seasonal changes, down 4% year over year. The volume of balance transfers was down 18% compared to April 2023. The typical seasonal peak in March was greatly reduced and may have spilled into April activity, with income tax filings due on April 15. The average amount of balance transfers was up 16%, or $572, at $4,146.
  • The credit card delinquency rate continued to decline in April, finishing at 2.34%.

The full report is available for download here or can be shared as a PDF upon request. Please let us know of any questions or additional needs, or if you’d like to coordinate an interview.


About Velera

Velera, formerly 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, operating with velocity to help its clients keep pace with the rapid momentum of change and fuel growth in the new era of financial services. Velera 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.

 

Contacts

Peyton Burgess
French/West/Vaughan
919-277-1168
pscu@fwv-us.com

More News