Credit Union Spending Outpaces Nation in June

A sample of credit union members increased their spending in the 12 months ending June 30 at a faster rate than the national average, according to reports released Tuesday.

Falling gasoline prices slowed the pace of overall gains for both groups.

The PSCU Payments Index report showed spending in June rose 1.7% by credit cards and rose 4.3% by debit cards compared with year earlier among credit union members using services of the St. Petersburg, Fla., CUSO.

Using unadjusted U.S. Census Bureau figures to compare with unadjusted data from PSCU, Census reported that total U.S. retail sales excluding automobiles and parts rose 0.9% in June from a year earlier.

Norm Patrick, vice president for Advisors Plus Consulting at PSCU, said services contributed to the largest share of positive overall growth for credit purchases.

“While consumers continue to feel financial pain from two years of high inflation and sharply increased borrowing costs, signs of improved sentiment were evident in the positive year-over-year credit and debit purchase growth in June,” Patrick said.

“For now, resilient consumer spending and the strong job market are staving off the odds of a full-blown recession,” he said. “The coming months will be key in determining the full effects of the Fed’s aggressive rate hikes.”

After seasonal adjustments, Census showed the May-to-June gains were both 0.2% for total retail sales and sales excluding motor vehicles and parts. When gasoline spending is also excluded the monthly gain was 0.3%. All those measures showed higher growth in May. For example, total sales rose 0.5% from April to May.

NAFCU Economist Noah Yosif said the “relatively subdued” retail sales gains suggest a slowdown in consumption that is “below-trend, but not recessionary.”

Yosif said the report won’t deter the Federal Open Market Committee from its previous hints of another rate hike at its July 25-26 meeting, but he said it will add to reasons for the FOMC to make July its last rate hike “before interest rates adversely affect economic growth.”

“NAFCU anticipates the Federal Reserve will choose to stick with its forward guidance hinting at another rate hike in July, supported by recent data suggesting that inflation remains persistent and driven by a tight labor market,” Yosif said. “However, June’s mediocre results could offer justification for refraining from any additional policy firming in the future.”

Here are some comparisons by segment between the Census and PSCU reports:

• Grocery store spending rose 1% in June from a year earlier, Census reported. At PSCU, spending rose 5% by credit and rose 5% by debit.
• Gasoline spending fell 22.4% in June from a year earlier, Census reported. At PSCU, spending fell 20% by credit and fell 17% by debit.
• Spending at restaurants and bars rose 9.9% in June from a year earlier, Census reported. At PSCU, spending rose 10% by credit and rose 9% by debit.

The PSCU Payments Index was based on data from credit unions that have been processing payments with PSCU since January 2021. It encompassed 2.7 billion transactions valued at $139 billion of credit and debit card activity in the 12 months ending June 30.