By: Karen Postma, Vice President, Risk Analytics at PSCU
The March edition of the PSCU Payments Index finds consumer behavior impacted by the downward-trending pandemic and the volatile geopolitical environment, especially after Russia’s invasion of Ukraine on Feb. 24 and the ensuing refugee crisis.
While the United States only imports 5% of its oil from Russia, post-pandemic supply chain concerns have already raised the average price of a gallon of gasoline with anticipation that prices will further increase. In addition to being the third largest producer of crude oil, Russia is the third largest producer of wheat, with Ukraine being the ninth largest producer. As the conflict continues and economic sanctions are levied, these and other exported commodities could further threaten global supply chains which are already strained due to the pandemic, even as the COVID-19 infection rate continues to decline.
Following last month’s Super Bowl LVI, we look into the Entertainment sector to explore Gambling transactions in this month’s Deep Dive. As more states have begun to legalize online gambling over the past few years, merchants such as FanDuel and DraftKings are driving accelerated growth in this segment through sports betting activity. This growth also provides an opportunity for credit unions to offer their members financial wellness education, as legal online sports betting is most appealing to younger demographics.
Key takeaways from our March report include:
- Consumer spending was very strong for both credit and debit purchases in February, with growth in credit (27%) nearly double the growth in debit (14%). The average purchase amount continues to increase, with the average credit purchase being $72.38, up 5.8% compared to February 2021. The average debit purchase was $45.58, up 3.9% compared to February 2021. The Travel and Entertainment sectors continue to experience the most growth, while increasing gasoline prices continue to propel the Gas sector. Restaurants continue to deliver impressive results, up 52% for credit purchases and 23% for debit purchases.
- Online legal gambling has accelerated since 2019 with growth in sports betting. The number of states permitting online betting has increased to 30 states and Washington, D.C., with an additional three states having it legalized but not yet operational. These represent 50% of the U.S. population, which is a 50% increase compared to February 2021, when there were only 20 states online representing 33% of the U.S. population. February 2022 included Super Bowl LVI, and the four gambling-related merchant category codes saw credit purchases up 52% and debit purchases up 59% as compared to 2021. As gambling continues to increase, especially in the online sports betting sector, consumer education on financial wellness should be a key focus for credit unions.
- The Consumer Price Index (CPI-U) for February increased to 7.9%, its highest point since January 1982. This represents a 0.8% increase from January. Sectors leading the increases this month include Gasoline and Food. On March 16, the Fed announced a quarter-point interest rate increase as expected.
- Continued stronger-than-expected job growth was recorded for February, with 678,000 new jobs. The unemployment rate dropped to 3.8%, with the estimated number of unemployed workers at 6.3 million, down 200,000 from February. These metrics have improved from February 2021 by 2.4 percentage points and 3.7 million workers, respectively. The current unemployment rate is also approaching the pre-pandemic low of 3.5% in January 2020.
The Payments Index continues to evolve along with consumer preferences and behaviors. We are focusing on year-over-year changes and fewer comparisons to pre-pandemic 2019, along with a greater emphasis on our monthly Deep Dive topic. We hope our financial institutions can take these relevant insights to help make informed, strategic decisions as 2022 continues to unfold.
Karen Postma is Vice President of Risk Analytics at PSCU, where she helps clients implement comprehensive fraud mitigation strategies that encompass authentication, transactional fraud and account takeover, just to name a few. Her background of over 20 years of Fiserv processing experience, with direct leadership of fraud prevention, fraud detection, chargeback and risk management expertise, has allowed her to understand both detailed and strategic practices that allow credit unions to balance their fraud and member experience. She also has extensive client management and engagement experience within the credit union industry.