Today, Velera – formerly PSCU/Co-op Solutions, published the November edition of the Velera 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.

Since our last Payments Index update, the U.S. presidential election concluded Nov. 5 with a decisive winner, the Federal Reserve cut interest rates by a quarter-percent on Nov. 7 and the 2024 holiday shopping season officially kicked off with the start-of-season sales in early October. Growth in consumer card spending improved in October, with increases for both debit and credit, while lower gasoline prices continued to negatively impact purchase growth as growth in gas transactions remained flat.

The Consumer Confidence Index increased in October to 108.7 from 99.2 in September, recording the strongest monthly gain since March 2021. The boost was seen across all age demographics and most income levels, as well as across the five components of the index – all posted in advance of the outcome of the presidential election results on Nov. 6. The University of Michigan Index of Consumer Sentiment increased for the fourth consecutive month in November, rising 3.5 index points (month over month) to 73.0 and marking an 11.7-point increase compared to November 2023 – the highest monthly score over the past six months. However, it’s important to note that the survey process for the Index of Consumer Sentiment changed earlier this year; in April, the survey began to include online respondents with a mix of phone calls. By July 2024, the survey was fully online. In one estimate, the change to exclusively online responses and the associated consumer demographics yielded a drop of nine index points.

In the Labor Department’s Nov. 13 update, the Consumer Price Index (CPI) increased 0.2% in October, bringing the cumulative 12-month rate of inflation up to 2.6%. Half of the increase in October came from shelter, which rose 0.4 percent, while food increased by 0.2 percent. The indices that dropped in October include apparel, communication and household furnishings. Core CPI, which excludes the Food and Energy sectors, remained the same at 3.3% for the 12-month Core CPI rate through October.

In October, jobs were essentially unchanged, with a slim increase of 12,000 buoyed by an upward trend in healthcare and government. Employment declined in manufacturing, mainly due to the impact of strike activity with Boeing. The U.S. Bureau of Labor Statistics (BLS) reported the overall unemployment rate also remained the same for October, at 4.1%, or 6.8 million people.

Looking ahead, the next and final 2024 Federal Open Market Committee (FOMC) meeting concludes on Dec. 18. While Fed Chair Jerome Powell said “in the near term, the [presidential] election will have no effects on our [interest rate] decisions,” the FOMC cited focus on supporting job growth while returning to their target inflation rate of 2%.

As the holidays rapidly approach, there are a variety of growth estimates for this year’s holiday shopping period. Adobe is forecasting consumer spending will be up 8.4% this holiday season, totaling $241 billion. In a more conservative estimate, the National Retail Federation (NRF) is forecasting 2024 annual sales will grow between 2.5% to 3.5%. In our November 2024 edition of the Velera Payments Index, we present the first of our three-part installment on holiday spending.

"At Community First Credit Union, we implement an annual holiday spend campaign, which runs from Thanksgiving through Giving Tuesday. Evolving over the past decade to align with members’ changing shopping habits, we have also expanded our Great Rewards credit card bonus, which offers 3x points to boost cardholder spending and has resulted in a strong ROI increase,” said Angela Skrobutanas, vice president, Product Marketing at Community First Credit Union (Appleton, Wis.). “In recent years, we have emphasized Small Business Saturday and Giving Tuesday to align with our members’ values and support our local community. This year's 'Season of Smiles' theme encourages spreading joy while earning rewards, with 3x points on Great Rewards and 3% cashback on our new Cash Back Visa Signature. Our aim is to support meaningful purchases and strengthen member engagement."

Key takeaways for October include:

• For October, year-over-year growth rates improved. Debit purchases were up 5.1%, while credit purchases were up 0.7%. Debit transactions were up 3.7% and credit transactions were up 1.7%. The Service and Goods sectors contributed to this positive growth, while lower gasoline prices contributed to small declines in purchases. Money Services continued to be the largest contributor to the growth in debit purchases, accounting for 1.8% of the 5.1% year-over-year increase.

• Multiple survey measurements reported marked improvements in consumer confidence, though job growth remains depressed. The 12-month CPI through October increased by 2.6%, up 0.2% from September. While economic and sentiment indicators are favorable, an anticipated December interest rate cut remains on the horizon as borrowing costs remain high.

• The 2024 holiday shopping season officially kicked off in October, with major retailers holding start-of-season sales events. Amazon, Target and Walmart all posted positive growth in debit card activity, while only Target posted positive growth in credit cards. For the month of October, the overall Goods sector posted strong year-over-year growth, up 5.5% in credit purchases and 5.7% in debit purchases.

The full report is available for download here or can be shared as a PDF upon request.