October 18, 2022 –
Today, PSCU – the nation’s premier payments credit union service organization (CUSO) – published the October 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.
As the fall season begins and we enter the last quarter of 2022, the U.S. economy continues to face persistently high inflation, a looming recession and rising energy prices. Yet consumer purchasing activity showed continued resilience in both credit card and debit card volume in September. In our October 2022 edition of the PSCU Payments Index, our Deep Dive looks into the Utilities sector as energy forecasts become top of mind heading into the winter months.
In the Labor Department’s Oct. 13 update, the Consumer Price Index (CPI) was up 0.4% for the month of September, bringing the 12-month rate of inflation to 8.2%. Increases in shelter, food and medical care were largely offset by a 4.9% decrease in the gasoline index. The Bureau of Labor Statistics (BLS) reported in its September 2022 jobs report that 263,000 jobs were added for the month – fewer than August (315,000 jobs) and below the pace of the first half of 2022 (approximately 400,000 jobs per month).
The Federal Reserve will meet on Nov. 1-2 with subsequent interest rate hikes likely, influenced by factors including inflation, jobs and the housing market. An interest rate increase in November would mark the sixth increase this year, with the previous five increases raising rates by a total of three percentage points. The Consumer Confidence Index increased for the second consecutive month in September, following three consecutive months of declines.
“This month’s Deep Dive in the PSCU Payments Index highlights the dramatic impact of inflation within the Utilities sector,” said Leanne McGuinness, chief financial officer, The Summit Federal Credit Union (Rochester, New York). While telecommunications and cable/internet remained strong, purchases and transactions remained largely flat. At the same time, purchases and transactions in the electric/gas/water/sanitation portion of the sector were up substantially year over year, signaling the inflationary effects that our members will be faced with to heat and maintain their homes as the winter months arrive. We appreciate PSCU’s analysis of these trends and assisting us to help our members with options to plan for and meet their monthly obligations.”
A sampling of key takeaways from the October report includes:
- Consumer spending on cards remains strong, with credit cards continuing to outpace debit cards. For September, credit purchases were up 13% and debit purchases were up 6% year over year. Year to date through September, credit purchases were up 18% and debit purchases were up 6%. Current inflationary pressures continue to drive growth in purchases, outpacing growth in transactions. For September, growth in overall transactions was up 11% for credit and 3% for debit.
- The Consumer Price Index (CPI-U) decreased on an annual basis to 8.2% in September, influenced by lower prices in Gasoline and higher prices in Shelter, Food and Medical Care. The Fed meets next on Nov. 1-2, with another large interest rate increase anticipated.
- In this month’s Deep Dive on Utilities spending, the two main components of the sector detail the inflationary impacts of energy costs and potential concerns of “fuel poverty” as we transverse the winter months. Growth in purchases for electric, gas (propane and home heating fuel), water and sanitation was up 29% for credit and 15% for debit for September 2022. For transactions, credit was up 13% and debit was up 5% for September. The second half of the Utilities sector, comprised of telecommunications and cable/internet access, saw year-over-year purchases up 9% for credit and up 1% for debit. For transactions, credit was up 10% and debit was down 2% for September.
- The September average credit card balance per active account was $2,797, up 6.1% (or $160) year over year. Credit card balances surpassed the September 2020 results of $2,787 for the first time since the decline in card balances that began in early 2020. The credit card delinquency rate for September was 1.74%, 16 basis points lower than pre-pandemic September 2019 levels.
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.
