Consumers Have Reset Spending Behaviors, Says CO-OP

RANCHO CUCAMONGA, Calif.– Consumers have reset their spending behaviors for the new year ahead, according to a forecast from CO-OP Financial Services.

The company said a decline in coronavirus cases from the omicron variant is “generating optimism” for a return to normal spending patterns over the coming months in key industries (including travel) that have yet to bounce back, the CUSO stated.

CO-OP reported its member credit union payment portfolio data showed month-over-month declines across most major merchant categories in both debit and credit. This was expected, and typical for the post-holiday period, CO-OP explained.

In credit, double-digit decreases in count and amount were seen in the Amazon/bookstores, grocery, retail, computers, office, home improvement and sports/recreation categories. The only categories that saw increases in December include education and camping.

“In debit, the story was much the same, with the notable exceptions of the lodging, medical and travel categories, all of which showed double-digit growth in amount,” CO-OP said.

The Key Categories

According to CO-OP, the key spending trends:

Omicron Had A Sharp, But Temporary Impact

In releasing its findings, CO-OP noted that according to the Centers for Disease Control, COVID-19 cases hit their peak on January 14. Since then, the seven-day moving average of daily cases has dropped precipitously.

The peak in cases coincided with the post-holiday shopping period, which traditionally shows much lower spending volumes than seen in the fourth quarter of the year. This year was no different, with month over month counts in the Retail category dropping by 35% in both debit and credit in January, CO-OP stated.

Credit Has Outpaced Debit For the Past Year

“Looking back to January 2021, it is remarkable how strongly credit has rebounded across most major spending categories,” CO-OP said. “For example, dining & entertainment was up by 35% in count and 45% in amount in January 2022 as compared with January 2021. Gas was up by 103% and 126%, respectively. Grocery increased by 85% and 42%, and retail by 4% in count and 44% in amount.”

But CO-OP noted the story for debit is a bit different, finding that while dining & entertainment was up by 6% in count and 23% in amount, and gas grew by 22% in amount, it was actually down year over year in several categories, including grocery, retail and computers.

“Overall, if you look at year over year in credit, we are much better off now than we were last January before vaccines were readily available, in spite of the omicron variant,” said John Patton, CO-OP Senior Payments Advisor.

Consumer Spending Is Poised For A Rebound

The biggest takeaway from January data is that despite the pause triggered by the omicron variant, consumers are gearing up to spend again, according to CO-OP.

“Federal and state officials have been refocusing the narrative from pandemic to endemic, with an underlying message that it is time for society to begin living with the virus. Consumers, meanwhile, are energized to get back to dining out, attending events and returning to normalcy,” CO-OP stated.

“The message is that consumers are ready to go and ready to spend again,” said Patton. “Unemployment is low, and consumers still have a lot of stimulus funds in their checking accounts. Once this latest variant recedes, we’re looking at a big resurgence later in the spring.”

Month-Over-Month Category-Level Spending (Comparing January 2022 to December 2021)