Credit Union Member Holiday Spending Weaker Than Rest of U.S.

Credit union member spending through two major CUSOs in November was weaker than retail spending data for the key holiday month released Thursday by the U.S. Census Bureau.

The Census Bureau reported that spending, excluding automobiles and parts, rose 7.5% in November from a year earlier.

PSCU, a payments CUSO based in St. Petersburg, Fla., reported Wednesday that November spending rose 5% by credit and rose 3% by debit compared with a year earlier.

Co-op Solutions of Rancho Cucamonga, Calif., reported Tuesday that spending fell 4.7% by credit and fell 2.7% by debit from the previous month. Census reported it rose 3.1% from the previous month — unadjusted to match the CUSOs’ data.

Seasonally adjusted data available only from Census showed a 0.2% drop in spending, excluding automobiles and parts, from October to November.

The PSCU Payments Index showed a continued shift from goods to services. Spending on goods fell 2% by credit and rose 1% by debit from a year ago, while spending on services rose 8% by credit and rose 6% by debit.

Norm Patrick, VP at PSCU’s Advisors Plus Consulting, said inflation continued to boost purchases in November, again outpacing growth in the number of transactions. For November, transactions rose 4% for credit and 1% for debit from a year earlier.

“Holiday spending in the goods sector remained softer throughout November, likely attributable to a combination of economic uncertainty and the shift to more experiential gifts,” Patrick said.

For the five-day peak shopping period that includes Black Friday and Cyber Monday, purchases through PSCU grew 1% by credit and 1.4% by debit, while purchases for select “experience categories” posted far stronger gains: cruises rose 79% by credit and 75% by debit, travel agencies/tour operators rose 67% by credit and 39% by debit and professional sporting events rose 34% by credit and 35% by debit.

Comparisons of spending categories from the reports include:

• Grocery store spending, which Census found rose 9.4% in November from a year earlier. At PSCU, spending rose 10% by credit and rose 6% by debit. At Co-op, spending fell 3.6% by credit and fell 0.7% by debit from the previous month. Census reported it rose 1.5% from the previous month.
• Gasoline spending, which Census found rose 15.4% in November from a year earlier. At PSCU, spending rose 13% by credit and rose 6% by debit. At Co-op, spending fell 9.8% by credit and fell 6.4% by debit from the previous month. Census reported it fell 7% from the previous month.
• Department store spending, which Census found fell 2.7% in November from a year earlier and rose 16.7% from the previous month. At Co-op, spending fell 26% by credit and rose 25% by debit from the previous month.
• Restaurant and bar spending, which Census found rose 13.6% in November from a year earlier. At PSCU, spending rose 12% by credit and rose 4% by debit. At Co-op, spending fell 8.1% by credit and fell 8.1% by debit from the previous month. Census reported it fell 6.4% from the previous month.

Co-op Solutions’ Payment Trends Report showed month-over-month declines in both debit and credit for November, with debit transactions down by 2.7% and credit down 4.7%.

“What we’re beginning to see play out is consumers being more frugal with their spending,” Beth Phillips, a Co-op Solutions director, said. “Conserving resources for necessities like rent, utilities, gas and groceries, while holding back on discretionary spending is very typical recessionary spending behavior.”

Average credit card account balances among PSCU affiliated members were $2,863 on Nov. 30, up 6.6% from a year earlier. Year-over-year credit card balances per account have increased above 6% for the past three months.

That kind of strength was also seen in the Fed G-19 Consumer Credit Report. The G-19 released Dec. 7 showed total credit card balances held by credit unions rose 15% from a year earlier and up 1.5%.from the previous month, compared with an average October gain of 0.4%. Credit unions’ share was 6.3% in October 2022, unchanged from September 2022 or October 2021.

PSCU found the credit card delinquency rate was 1.92% on Nov. 30, just 5 basis points lower than its pre-pandemic rate in November 2019 — “the narrowest gap to date and a notable change from 14 basis points in October,” its report said.

The PSCU Payments Index was based on data from credit unions that have been processing payments with PSCU since January 2020. It encompassed 2.9 billion transactions valued at $146 billion of credit and debit card activity in the 12 months ending Nov. 30.