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March Spending Trends: The spring spending boom is here!

CO-OP Solutions Payments Trends Report (Spending Data from March 1-31)

April 13, 2023 – March payment activity roared like a lion, as spending increased substantially across all merchant categories despite mixed economic trends.

Nonfarm payrolls grew by 236,000 for the month, in line with consensus expectations of a slowing hiring pace. Unemployment still ticked down to 3.5%, indicating strong labor force participation. In addition, the unemployment rate for Black Americans fell by 0.7%, reaching a historically low level of 5%.

Despite these job market gains, the pace of layoffs has begun to accelerate, up nearly 400% in March as compared with a year prior. In addition, the Labor Department reported that job openings fell below 10 million in February for the first time since early 2021.

The Federal Reserve raised its benchmark interest rate another quarter point in March, to a range of 4.75-5%. This was lower than the 50-basis point hike that was expected before the recent failures of Silicon Valley Bank, among other institutions, which had sent equity markets tumbling earlier in the month.

Overall, Co-op spending data reports that March 2023 transaction volume was higher across both the debit and credit portfolios versus March 2022.

Co-op’s SmartGrowth consultants areclosely watching the following key spending trends this month:

1. Spring has sprung! In March,virtually every debit and credit category showed double-digit growth from March 2022 spend to March 2023, reflecting a strong seasonality effect. The biggest gainers included Campers & Camping, Entertainment and Home Improvement. Golf Courses led the way with a 42.9% increase in debit and 36.7% rise in credit. Overall, debit transactions were up 13.8% for the month, and credit was up by 14.5%.

“Consumers noticeably increased their debit and credit spending in March,” said John Patton, Co-op Senior Payments Advisor. “Whether that means more expenditures on dining and entertainment, booking a trip for later in the season or hitting the links for a round of golf, the improving weather has given people a case of spring fever.“

2. Everyday spending to face declines. Despite big gains across most categories in March, the longer-term outlook for consumer spending is less rosy. Retail sales slipped in February by 0.4% compared with January’s levels, and durable goods spending fell even further.


“Retail spending is going to continue to feel pressure as we move deeper into 2023,” said Patton. “People will reserve their in-person shopping for more ‘experiential’ visits – such as new releases of goods, shoes and apparel, and the opportunity to have unique, in-store experiences. For everyday items, consumers are tightening their wallets, and will continue to look for deals online, as well as delivery and curbside pickup for convenience.”


3. Credit balances continue to rise. 
U.S. credit card debt declined by 17% through the first two years of the pandemic. But in the last quarter of 2022, it reached nearly $1 trillion, a record high, per the New York Fed. Just as concerning, the percentage of credit card accounts that are more than 90 days delinquent has begun to rise, reaching over 4%.

After the first two months of 2023 had the first balance declines since January 2022, March credit portfolio balances increased 1.13% from February’s. In addition, credit balances continued to grow in March 2023 and were up by 14.86 over March 2022.


Year-Over-Year Category Level Spending (Comparing March 2022 to March 2023)

% Difference from Mar’22 vs Mar’23 YoYDebitCredit
Category# of Transactions$ of TransactionsInterchange#Transactions_YOYAmount_completed_YOYInterchange_YOY
Amazon/Bookstores5.3%-0.7%-3.7%13.3%7.2%-6.2%
Amazon/Bookstores5.3%-0.6%-3.7%13.4%7.3%-6.3%
Books, Periodicals, and Newspapers1.9%-6.6%-2.0%5.3%-1.5%-2.9%
Campers & Camping-14.8%-5.8%-10.0%-10.7%-9.2%-9.2%
Campers & Camping-14.7%-5.0%-6.9%-10.2%-6.6%-7.3%
Mobile Home Dealers-15.2%-6.9%-16.2%-12.2%-12.3%-11.8%
Computers10.6%3.1%-4.7%4.6%0.1%4.4%
Digital Goods19.8%19.4%23.0%23.6%22.2%18.1%
Dining & Entertainment2.9%8.3%7.4%4.5%8.2%5.2%
Entertainment6.3%11.3%7.9%7.1%10.6%6.9%
Fast food, Restaurants, Bars1.9%5.2%5.8%4.0%7.2%4.2%
Government/gambling63.3%81.5%55.8%58.3%47.3%49.7%
Education16.5%6.3%9.1%14.4%8.2%9.7%
Gas-3.4%-11.4%-8.1%-2.2%-11.6%-5.1%
Grocery1.9%2.5%2.5%4.6%4.3%10.3%
Grocery1.9%2.7%2.5%4.5%4.3%10.3%
Wholesale2.5%0.2%2.3%7.0%4.5%10.6%
Home Improvement-9.8%-13.6%-12.9%-6.6%-8.4%-7.4%
Medical1.4%2.6%2.0%2.8%3.0%3.5%
Office-4.0%-3.0%-1.3%-2.5%-1.8%-5.4%
Other2.4%4.3%3.9%3.2%5.5%2.9%
Auto Dealers/Services/Parts-7.3%-3.7%-5.6%-6.2%2.0%2.8%
Cable, Satellite, and Other0.3%-0.8%0.1%3.0%1.6%3.3%
CU Services26.7%11.9%15.9%21.6%10.8%16.3%
Furniture-13.9%-16.9%-17.8%-12.9%-14.8%-13.9%
Giving4.9%1.1%6.0%-0.3%-4.1%-4.0%
Insurance-0.1%6.0%3.4%3.1%10.7%12.0%
Other43.1%-8.0%0.3%39.0%-0.6%0.9%
Pet-2.4%2.4%-1.0%-1.4%4.1%2.1%
Professional Services2.0%2.6%-1.7%1.2%2.7%0.6%
Real Estate12.6%22.2%28.3%17.4%25.2%19.2%
Self-care13.7%16.7%9.3%3.8%6.0%4.1%
Subscription services-9.5%-2.5%-8.5%-5.5%-0.2%-4.7%
Utilities1.7%5.3%3.7%7.0%10.6%14.5%
Retail-3.4%-6.5%-6.3%-0.1%-2.5%-1.7%
Department Stores-12.9%-14.2%-13.5%-11.5%-12.0%-14.1%
Discount Stores-1.9%-0.4%-0.4%2.2%4.6%7.3%
Retail-2.8%-8.3%-7.3%0.5%-3.7%-3.5%
Specialty Retail-14.5%-5.4%-11.1%-14.0%-3.9%-4.2%
Florists, antiques, jewelers, cigars, stamps, etc.-14.5%-5.4%-11.1%-14.0%-3.9%-4.2%
Sport/Recreation-1.7%-4.1%-4.0%-1.6%-5.8%-7.0%
Golf courses-12.5%-11.5%-12.0%-7.9%-3.5%-8.4%
Sport/Recreation-0.7%-3.8%-3.6%-1.0%-5.9%-7.0%
Travel4.5%-1.2%1.0%11.7%9.1%7.4%
Airline-7.3%-4.9%-4.8%-1.9%6.6%4.1%
Auto Rental-3.0%-6.3%-6.9%0.8%-4.4%-7.7%
Lodging-12.7%-23.4%-21.4%-4.4%-9.6%-11.0%
Other Travel (railroad, taxi, cruise lines, toll fees, etc.)8.1%22.4%22.0%17.4%35.5%33.3%
Gross Total1.5%1.1%1.2%3.3%2.4%2.4%

What Credit Unions Should Do Now

As credit unions face an uncertain economic environment featuring rising rates, layoffs, inflation and a volatile stock market, it’s time to aggressively promote the credit union difference to members and prospective members.

As leading card issuers like Capital One and Bank of America jack up their rates as high as 29% in response to the Fed’s recent rate hikes, this limitation constrains credit unions’ ability to earn interest income on their credit portfolio, especially as they are forced to raise deposit rates and must protect against increasing credit risk.

This gives many non-credit union card issuers a leg up, in terms of being able to offer rich rewards programs, balance transfer incentives and even cash back in exchange for opening new accounts. In response, credit unions should aggressively promote their value proposition, which includes lower rates, along with outstanding service and personalized guidance.

“This is not the time to be complacent,” said Beth Phillips, Director, Co-op Solutions. “Illustrate the significance of your card rates in comparison to industry-rates and the anticipated savings your card products offer. Reexamine your current card product pricing strategies, terms and conditions to determine if a change to terms or reprice is necessary to be market competitive. Card products can be one of the most profitable solutions for our institution, but must be optimized to remain competitive andprofitable.

“Analyze your portfolio to identify those accounts that are inactive, and have a conversation with those members,” said Patton. “Listen to your members’ needs, and look for opportunities to convert those accounts to active relationships. In some cases, it may not be the best fit for you or your member, and you may need to close less profitable accounts because they are higher risk or less active.”

More information on the Co-op SmartGrowth Consulting Team can be found here.


About Co-op Solutions


Co-op Solutions is the market-leading financial technology platform whose mission is to connect credit unions to the technology, strategic partnership and scale they need to best serve their members now and into the future. Co-op 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. For more information, visit coop.org.

Contact: 
Bill Prichard, APR, Dir., P.R.
Co-op Solutions
(909) 532-9416
bill.prichard@cooop.org.