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Santa pulled out stops

Americans splurged, with more credit usage, more spending overall in December

Santa pulled out stops

During the past holiday season consumers favored credit cards over both PIN and signature debit cards, amid a significant spike in spending growth rates in consumer categories year over year for December.

December saw dollar volume growth of 6.1%, compared to the growth rate of 4.4% seen in November, according to First Data Corp.’s SpendTrend monthly report. That was in overall consumer spending, while retail spending specifically rose 3.1% year over year.

First Data indicated that consumers’ mood and confidence has been improving. As a result, they were more willing to charge, rather than simply transact with debit cards. Credit transactions grew by 7.3%, year over year, in December, versus 5.6% in November. PIN debit rose 5.7% and signature debit rose 2.3% in December, versus 7.4% and 2.9% in November.

Growth in number of transactions—versus total dollars—saw a significant upturn, rising 5.2% in December versus 4.8% in November. The retail transaction growth rate rose to 1.9%, up from 0.7% in November.

“Shoppers splurged on holiday gift giving,” First Data reported.

“Holiday shoppers were out in full force and did not have time to procrastinate due to the shortened holiday window,” First Data stated in its monthly summary. “The growth was supported by extended store hours, pre-Christmas and post-Christmas, and the promotional environment which lured in last-minute bargain-seeking shoppers.”

More free shipping offers and price-matching policies also helped bolster growth, First Data said.

Weather hurt, gas prices helped

Average ticket growth—amount spent per store visit—was 0.8% in December, versus -0.3% in November. However, over the course of December totals began falling off as merchants began discounting to attract last-minute buyers and to move seasonal inventory.

The company speculated that the holiday upturn could have been still higher. However, rough weather in the Midwest and Northeast dampened some shopping. Still, all regions showed positive year-over-year growth.

First Data noted that a multi-month dip in gasoline prices also encouraged Americans to get out and hit the malls, though they were apparently cutting back in one areas: meals out.

“Food Services/Drinking Places spending growth of 4.6% marked the slowest growth in ten months as shoppers held back on eating out during their holiday shopping,” the report said.

How First Data tracks point of sale spending

The First Data SpendTrend monthly report, which this comes from, bases its analysis on actual point of sale same-store results, drawing on the tracking from the company’s payment network. The company computes year-over-year growth rates in spending overall and by categories of goods and services, and then compares growth rates in sequential months.

First Data says it believes year-over-year growth rates help form better conclusions about organic spending patterns than month-to-month growth rates, with its analysis then comparing the differences in year-over-year growth rates. The company does not make adjustments for seasonality, as it believes that distorts the statistics, which are drawn from actual spending, not sampling.

More information about the SpendTrend reports

Steve Cocheo

Steve Cocheo’s career in business journalism has taken him to all 50 states and nearly every corner of banking in institutions of all sizes. He is executive editor of ABA Banking Journal, digital content manager of ababj.com, and editor of ABA Bank Directors Briefing. He coordinates the popular Pass the Aspirin and First Person features and wrote the booklet series Focus On The Bank Director. He is the only journalist to have sat in on three federal banking exams, was a finalist for the Jesse H. Neal national business journalism awards, and a winner of multiple awards from the American Society of Business Publication Editors.

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