September 15, 2022 – Today, PSCU – the nation’s premier payments credit union service organization (CUSO) – published the September 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.
It’s back to school time again, as students of all ages have returned to classrooms throughout the country. And morning traffic is not the only thing that’s increased as a result, with consumer purchasing activity showing strength in both credit card and debit card volume in August. In our September 2022 edition of the PSCU Payments Index, we take our second annual Deep Dive into back-to-school purchasing.
In the Labor Department’s September 13 update, the Consumer Price Index (CPI) was up 0.1% for the month of August, bringing the 12-month rate of inflation to 8.3%. Increases in shelter, food, medical care, electricity and natural gas were largely offset by a 10.6% decrease in the gasoline index. The Bureau of Labor Statistics (BLS) reported the August 2022 unemployment rate rose to 3.7%, with the number of unemployed increasing by 344,000 to 6.0 million.
The Federal Reserve will meet on September 20-21 and is expected to announce an additional 0.75% interest rate hike to help curb inflation, which, if materialized, would be the third consecutive 75-basis-point increase. The Consumer Confidence Index increased in August following three consecutive months of declines, now at 103.2 (1985=100). While both purchasing intentions and vacation intentions increased for the month, high inflation and interest rate actions by the Fed continue to pose short-term risks to economic growth. The average national gasoline price dropped to $3.75 per gallon on September 5, down $1.26 per gallon or 25% from the peak in June 2022. Current per-gallon prices are up 18%, or $0.57, from a year ago.
“August saw strengthening of spend on both credit and debit cards, including those merchant categories included in our Deep Dive on back-to-school spending this month,” said Tom Bennett, principal, Advisors Plus at PSCU. “Credit is performing extremely well, with nearly every merchant category experiencing double-digit growth. While debit growth was more subdued, there is notable growth in the newer methods of payments like contactless – more than one in four eligible debit transactions are now tapped – and the variety of Card Not Present (CNP) alternatives, where almost one out of every two dollars spend is CNP.”
A sampling of key takeaways from the September report includes:
- Consumer spending on cards was strong, with growth accelerating from last month and credit cards again outpacing debit cards. Credit purchases were up 16% and debit purchases were up 7% year over year. Current inflationary pressures continue to drive growth in purchases, outpacing growth in transactions. For August, growth in overall transactions was up 13% for credit and 3% for debit.
- The Consumer Price Index (CPI-U) decreased on an annual basis to 8.3% in August, influenced by lower prices in Gasoline and higher prices in Shelter, Food and Medical Care, as well as Electricity and Natural Gas. The Fed meets next on September 20-21, with another large interest rate increase anticipated.
- Purchase growth in this month’s Deep Dive on back-to-school spending follows similar trends in overall spending growth, with credit purchases up 12% and debit purchases up 3%. Growth rates in clothing-related merchant category purchases were more evenly distributed throughout the overall list of back-to-school categories this year, whereas clothing categories represented the largest growth in purchases and were clustered at the top of the list in 2021, influenced by the return to in-person learning.
- The credit card delinquency rate for August was 1.62%, 14 basis points lower than pre-pandemic August 2019 levels. The average credit card balance per active account was $2,780, up 4.9% (or $130) year over year. August marked the sixth consecutive month in which year-over-year growth was over 2% and was the strongest month in 2022.
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.