Today, PSCU – the nation’s premier payments credit union service organization (CUSO) – published the June 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, PSCU focuses on the various factors impacting the payments industry that indicate signs of an accelerated economic rebound. With the CDC updating its travel guidance and relaxing guidelines on social distancing and activities for fully vaccinated Americans, consumer comfort levels continue to increase as domestic travel bookings and event attendance are on the rise. The study looks at the impact of these forces and takes a deep dive into one of the sectors hit hardest during the coronavirus pandemic: Entertainment.
“In this month’s PSCU Payments Index, consumer spending continues to show signs of quickly rebounding, with strong growth rates in May for both debit and credit,” said Brian Scott, SVP, Chief Growth Officer at PSCU. “Fueled with extra money in savings and lower household debt balances, consumers are poised to emerge from the economic downturn far better than economists originally anticipated. Yet with this fast recovery from the pandemic-induced recession, demand is bouncing back faster than supply can keep up – causing shortages and inflationary risk. At the same time, signs of pent-up ‘revenge’ spending continue as consumers increase discretionary spending on larger purchases. In this month’s Deep Dive, we explore the Entertainment sector, where debit and credit purchases exceeded 2019 levels for the first time.”
A sampling of key takeaways from the June report includes:
- While May CPI-U jumped to an annual rate of 5.0%, its largest increase since 2008, the Federal Reserve is now expecting to raise interest rates during 2023 (versus after 2023). The Fed’s 2021 inflation forecast has also increased by a whole percentage point to 3.4%.
- Growth in card payments remains strong, with the Entertainment sector (this month’s Deep Dive) returning close to 2019 levels
- With COVID-related restrictions easing, in-person attendance at major sporting events, amusement parks and other events is on the rise, signaling a return to pre-pandemic levels
- As consumer comfort levels with in-store purchases increase, Card Present volume continues to improve – but still significantly trails Card Not Present growth
- Credit card account balances posted a modest improvement in May
- Gasoline purchases are up compared to 2019 levels, fueled by both higher prices at the pump and increased demand as crude oil hit $70 per barrel for the first time in three years
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.