Today, PSCU published the December edition of the PSCU Payments Index, the goal of which is to provide information and insights to help financial institutions navigate the evolving financial landscape to make informed, strategic decisions for their organizations and members.

As we approach the end of the holiday shopping season, December remains a crucial time for holiday spend. According to Gallup, about half (49%) of holiday shoppers will do most or all of their holiday shopping in December. In the December 2023 edition of the PSCU Payments Index, we present the second installment of our three-part Deep Dive series on holiday spending, which includes the results of the Black Friday through Cyber Monday shopping period. According to the National Retail Foundation, a record 200.4 million consumers shopped on Thanksgiving Day through Cyber Monday. Card spending growth for November increased year over year for debit, while credit activity held steady, largely driven by digital spending.

The Consumer Confidence Index increased to 102.0 in November following a consecutive three-month decline, up from a downwardly revised 99.1 in October. November’s increase in consumer confidence was focused primarily among households ages 55 and up, while confidence among households ages 35-54 declined slightly. Consumer sentiment around the expected financial situation over the next six months also rallied in November following a downward trend in the two months prior.

In the Labor Department’s Dec. 12 update, the Consumer Price Index (CPI) increased 0.1% in November, bringing the 12-month rate of inflation to 3.1%, a slight decline from October. Decreases in the cost of gas and long-lasting goods offset increases in prices for housing and transportation. Core CPI, which excludes food and energy sectors, rose 4% year over year, up 0.3% from October. On Dec. 13, the Federal Reserve voted to leave interest rates unchanged at their current 22-year high. The next Federal Open Market Committee (FOMC) meeting is scheduled for January 30-31, 2024, with three interest rate cuts possible next year.

The U.S. Bureau of Labor Statistics reported total jobs increased by 199,000 in November 2023, with most job gains occurring in health care and government. Additionally, manufacturing bounced back with the return of striking workers. The overall unemployment rate for November dipped to 3.7%, or 6.3 million people.

The stopgap government action approved in November extended funding for some government agencies through January 19, 2024, and others through early February. Additional funding requests and discussions will take center stage as we enter 2024, along with requests for funding for border protection and the wars in Israel and Ukraine. As substantial economic impacts are typical byproducts of government shutdowns, we will continue to monitor these developments closely.

“With retailers launching holiday promotions earlier each year, the longer promotion cycle has contributed to an overall slower pace of holiday spending. This year, the important Black Friday through Cyber Monday shopping weekend delivered positive year-over-year growth in consumer purchases and transactions in the Goods sector,” said Norm Patrick, vice president, Advisors Plus Consulting at PSCU. “As we approach the final stretch of the holiday shopping season, we will keep a watchful eye on whether consumers continue to spend or pull back, a key indicator of consumer financial health.”

A sampling of key takeaways from the December report includes:

• Year-over-year growth rates for payment cards were more sizeable for debit than credit, with debit purchase growth up 5% compared to 0.5% for credit.

• Holiday spending in the Goods sector improved in November when compared to October. Year-over-year growth in purchases for the overall Goods sector was down 0.1% for credit and up 4.4% for debit in November. For the cumulative holiday season, Card Not Present (CNP) growth outpaced Card Present (CP) growth for both credit and debit transactions. For the five-day peak shopping period that includes Black Friday to Cyber Monday, year-over-year Goods sector debit purchases (+5.6%) grew more than Goods sector credit purchases (+3.1%).

• The Consumer Price Index (CPI-U) increased 0.1% in November, while the 12-month rate of inflation was up 3.1%. Shelter continued to rise and offset a decline in Gasoline. Excluding the volatile Energy and Food sectors, the core CPI index increased 0.3% in November, putting the 12-month Core CPI index at 4.0%

• Mobile Wallets continue to gain popularity. For November, credit mobile wallet transactions represented 3.5% of overall credit transactions and debit mobile wallet transactions represented 6.0% of overall debit transactions.

• The credit card delinquency rate for November reached 2.46%, an increase of 13 basis points from October.

The full report is available for download here.