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PSCU Payments Index – November Edition

November 18, 2021 – Today, PSCU – the nation’s premier payments credit union service organization (CUSO) – published the November edition of the PSCU Payments Index, the goal of which is to provide information and insights to help financial institutions make informed, strategic decisions on the road ahead.

In this month’s iteration, we see strong consumer purchasing during the initial weeks of the holiday shopping season, combined with mixed consumer sentiment on the state of the economy. As the Consumer Confidence Index posted the first increase in four months, workers remain in high demand with increasing pay and a steadily improving unemployment rate. This month, we present the first in a three-part Deep Dive into 2021 Holiday Spending.

“The holiday spending season got underway earlier than ever with Black Friday-style deals from major retailers showing up in early October,” said Yvonne Stelpflug, SVP, Advisors Plus at PSCU. “Strong consumer spending performance, including the first month of 2021 in which all sectors reported growth above 2019 levels for credit purchases, indicates that buyers are heeding the warnings of uncertainty as retailers grapple with supply chain difficulties and labor shortages. While the holiday season could be challenging for both retailers and consumers, we do anticipate strong demand and a rise in overall spend. In this month’s Deep Dive, we begin a three-part series on Holiday Spending to monitor ongoing trends throughout the 2021 holiday shopping season.”

A sampling of key takeaways from the September report includes:

  • Consumer spending remained strong for both credit and debit purchases as the Consumer Confidence Index increased in October, reversing a three-month downward trend.
  • Two positive indicators over the last month were centered around credit card usage. October marked the first month of 2021 in which all sectors reported growth above 2019 levels for credit card purchases, while the overall credit card delinquency rate has remained 61 basis points lower than 2019 results for two months, finishing at 1.32%.
  • Inflation increased again as the CPI-U for October rose to 6.2% year over year, now a 31-year high. The 0.9% increase over September included notable increases in energy costs. Continued inflationary pressures could prompt the Fed to raise interest rates in 2022.
  • Workers remain in short supply as many retailers are paying premiums for seasonal holiday staff. The unemployment rate fell to 4.6% in October as 531,000 jobs were added during the month. At the same time, the number of jobs created in August/September was adjusted upwards by 235,000 in total by the BLS.
  • From our Holiday Spending deep dive, Goods sector purchases were strong, with credit up 13.6% and debit up 9.5%. Retailers are luring shoppers in early as they work to ensure Black Friday is not rife with supply chain issues and staff shortages, which could lead to inventory problems, higher prices and shipping delays.

As the new realities of a post-pandemic economy begin to materialize and the PSCU Payments Index continues to evolve accordingly, you’ll see that we are now beginning to focus more on year-over-year changes and less on comparisons back to pre-pandemic 2019.

The full report is available for download here or can be shared as a PDF upon request. Additionally, feel free to subscribe here to receive updates when the PSCU Payments Index is published each month.