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The expiration of enhanced unemployment benefits at the end of July may already be having an impact on consumers. According to PSCU's latest shopping trends analysis, overall card payment growth rates trended downward for the week ending Aug. 4, just a few days after the $600 benefits initiative provided by the Federal CARES Act was allowed to lapse.
Per the report, debit card spend was up only 11.9%, which dropped from the prior four-week average of 17.9%. Credit card spend also suffered a similar decline, down 4.3% year-over-year.
Glynn Frechette, SVP of Advisors Plus at PSCU, tied some of that downturn into not only the expiration of $600 unemployment benefits, but the uncertainty surrounding whether or not children will return to school in the fall.
"We know from our data that back-to-school time is second only to the holiday season as a purchase event. Early indications show some sluggishness this year, given delays in school openings and variations in attendance due to the ongoing COVID-19 pandemic," Frechette said.
Meanwhile, consumers have been continuing to favor contactless, mobile wallet and card-not-present payments over ATMs. The number of cash withdrawals was down 22.9%, which is just above the average for the past 10 weeks. Mobile wallet transactions, on the other hand, are continuing to trend upwards, with debit mobile wallet purchases up 73.8% for the week and credit mobile purchases up 48.2% year-over-year.
Exactly where those transactions are occurring also appeared to be consistent. Per the report, grocery sector purchases for the week were up 5.5% for debit and 14.9% for credit. Drug stores also saw a bump, up 8% for debit and 3.8% for credit.
But while a PSCU report for the week ending July 26 saw debit spend within the restaurant sector land in a positive place for the first time since the outbreak of the COVID-19 pandemic in March, the beginning of August saw that category decline by 1.7%.
Still, travel and entertainment continued to be the worst impacted sectors.Travel spend was down 30.4% for debit and 58.9% for debit. Over in the entertainment industry, purchases made with debit cards were down 37.9% while credit card use shrank by 53.7%.
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Frank Ready
Frank Ready is a reporter on the tech desk at ALM Media. He can be reached at [email protected].
