The University of Michigan’s consumer sentiment index just sank to 48.1. Meanwhile, debit card purchases jumped 9.5% from a year earlier. Consumers, it seems, are worried and shopping at the same time.
That gap between mood and behavior is the story of the October 2026 Velera Payments Index. Velera, the payments CUSO (credit union service organization) and fintech provider, also rolled out its quarterly metrics update this month. It covers credit card balances, delinquencies and digital wallet activity, and it shows wallets taking a bigger role in everyday payments. Card-not-present spending (think online and phone purchases) stayed strong, and shoppers leaned harder into the essentials as prices kept climbing.
The Job Market: Mixed Signals
September’s labor data didn’t agree with itself. The Bureau of Labor Statistics (BLS) counted just 29,000 new nonfarm jobs, far short of the 84,000 forecast. Unemployment ticked up to 4.2% from 4.1%, though it has stayed inside a narrow 4.1% to 4.3% band since March. Average hourly earnings grew 3% year over year, the slowest pace since May 2021.
ADP told a sunnier tale. Private employers added 90,000 jobs, up from August’s revised 36,000, and base pay rose 3.2% year over year. The New York Fed’s Survey of Consumer Expectations also found people less worried about losing their jobs and more upbeat about finding work, even though household finances still caused plenty of stress.
Confidence Slides Anyway
Steady hiring didn’t lift spirits. The Michigan index dropped from 51.7 in August, its lowest reading in four months. People rated both their current and future finances more weakly, though some said it was a decent time to buy durable goods, mostly to get ahead of higher prices.
The Conference Board’s Consumer Confidence Index fell 6.7 points to 81.9. That missed forecasts and marked its lowest level in more than a decade. Consumers are heading into the final quarter cautious, even if their wallets say otherwise.
Inflation Keeps Its Grip
Headline CPI rose 0.6% for the month and 3.7% year over year, up from 3.4% in August. Core CPI, which strips out food and energy, climbed 0.3% monthly and 2.6% annually. Energy did most of the heavy lifting, but the firmer-than-expected core number hints that price pressure is spreading beyond the usual volatile suspects.
What the Fed Might Do
The Federal Open Market Committee meets October 27-28. After the soft BLS jobs report, most expect a pause, with the federal funds rate holding at 3.75% to 4.00%. The inflation data, though, strengthens the case for one more hike before year-end, and markets are increasingly eyeing the December 8-9 meeting.
Key Takeaways From September
- Spending stayed strong under pressure. Debit purchases grew 9.5% year over year and credit purchases 6%. Goods led growth for both, and Gasoline remained a major driver thanks to pricey fuel.
- Essentials led the way. Non-discretionary spending beat discretionary on both card types. Debit rose 9.6% for non-discretionary versus 8.6% for discretionary. The credit gap was wider: 6.7% versus 2.8%.
- The labor market cooled without cracking. Wage growth trailed inflation and unemployment edged up to 4.2%. Hot inflation data supports a Fed hold in late October and another hike later this year.
Norm Patrick, Vice President of Payments & Deposits Consulting at Advisors Plus, sums it up: “The disconnect between consumer sentiment and spending continues to widen. We continue to see a shift in how and where consumers spend, with everyday essentials accounting for a larger share of growth, while digital payment methods are becoming even more ingrained in daily life. As consumers look for value and convenience, credit unions have an opportunity to strengthen relationships by making sure their cards remain the preferred choice wherever members choose to pay.”
For credit unions, the practical move is clear. Members are buying groceries, gas and other necessities, and they’re paying with phones and online checkouts more often. Make sure your card sits at the top of the wallet, literally and figuratively, and you’ll stay in the picture wherever your members choose to pay.