Credit card use upThe stand-out data in this SpendTrend analysis concerned the ways in which people are choosing to pay for their purchases. Here's the breakdown of dollar-volume, same-store growth for different payment media in February:
- Credit cards: up 7.9 percent
- Signature debit cards: up 2.0 percent
- PIN debit cards: up 1.3 percent
- Checks: down 4.2 percent
- Closed-loop (usually store-branded) prepaid cards: up 3.2 percent
Why credit cards are making a comebackSo why are people increasingly reaching for their credit cards again? Well, even the experts aren't entirely sure. In a press release, First Data vice president and economist Rikard Bandebo explored some possibilities:
The fact that the personal savings rate significantly declined in January and consumers shifted more spending onto credit cards could be a sign that consumers may be overstretched. However, there are many other factors that could impact spending going forward including an improving labor market, steadily rising home values, healthy gains in the equity markets and the federal budget sequestration.Yes, consumers could be swiping their credit cards more because they feel richer and more secure, and therefore less stressed and guilty when they flash their plastic. And they could well be right to do so:
- On March 8, the U.S. Department of Labor announced that unemployment is continuing to fall: by 236,000 in February, bringing the rate down to 7.7 percent, from 7.9 percent in January.
- That trend looks set to continue. On March 12, the quarterly Manpower Employment Outlook Survey reported the results of a poll of more than 18,000 U.S. employers. In every state and metro area, respondents on average reported positive hiring plans -- to an extent that ManpowerGroup characterized the shift as "a significant increase in job prospects." Meanwhile, the number of employers anticipating staff cuts was at its lowest since 2000.
- Also on March 12, Comerica Bank published its U.S. Economic Update for that month, and observed that, in February: "Not only were more workers hired, but they also worked longer hours and got paid more…"
- That Comerica Bank update's GDP forecast showed annualized growth at 2.0 percent or more in each quarter of 2013, rising to 2.7 percent in the final three months of this year.
- And, on March 4, Fiserv Case-Schiller said it expects the housing market soon to return to normal, with a sustained growth in prices.
- Meanwhile, the Dow Jones Industrial Average reached a record high on March 5 -- and then went on to set new records on at least three more consecutive days.