By: Velera 

In the November edition of the Velera Payments Index, we see that consumer card spending improved in October, with increases for both debit and credit. As the 2024 holiday shopping season officially kicked off with start-of-season sales in early October, we present the first installment of our annual three-part Deep Dive series on holiday spending in this month’s edition. 

The number of available jobs remained essentially the same for October, with slight increases in healthcare and government. 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. The Consumer Confidence Index recorded its strongest monthly gain since March 2021 with an increase to 108.7 in October from 99.2 in September. The boost was seen across all age demographics and most income levels — all in advance of the outcome of the presidential election results on Nov. 6. 

Key Takeaways

Key takeaways from the November 2024 edition of the Payments Index 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. The Target Circle Week event had credit purchases up 3.0% and debit purchases up 2.8% year over year. For Amazon’s Prime Big Deal Days event, debit purchases were up 3.3% and credit purchases were down 1.6% year over year. Walmart had the weakest year-over-year growth of the three big retailers, with debit purchases up 1.8% and credit purchases down 0.4%. 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.

Wrapping Up: Political Contributions

With the 2024 U.S. election season complete, campaign advertising has also concluded. AdImpact estimated total political advertising was nearly $11 billion across all races, an increase of 13% of the 2020 election cycle. Similar to 2020, the volume of transactions and purchases in the Political Organizations category continued to increase until the week of the election, although the 2024 indexed values were not as sharp of an increase as in 2020. 

What Should Credit Unions Do Now? 

• The new year is the ideal time to focus on acquisition strategies — new accounts play a key role in credit and debit portfolio performance. Targeting new checking accounts via a checking acquisition program is a valuable growth strategy for debit. For credit, credit unions can explore a variety of custom and turnkey credit card account acquisition marketing campaigns. January campaign enrollment deadlines are approaching for spring campaign launches – contact your Velera Client Growth Executive (CGE) for details.
   
• Along with credit and debit account acquisition initiatives, new account onboarding journey campaigns are essential to increase member engagement and build loyalty. Drive card activation and first use with early and ongoing messages – critical checkpoints to establish and maintain top-of-wallet status. Learn more about Advisors Plus onboarding journeys and contact your Velera CGE to enroll.
   
• Credit card delinquencies remain elevated and tend to rise during the holiday season. Consider resources to assist or supplement your credit union’s collection activities. Velera’s TriVerity offers a variety of first- and third-party services. Reach out for details on options to align with your strategies.
   
• Balance transfer campaigns are essential credit card marketing strategies. For example, Velera Consulting transfer campaigns showed an average responder amount of more than $6,500. Begin planning a spring marketing campaign now, as peak usage for balance transfer checks typically occurs in March. Deadline for enrollment is Dec. 15.

Looking Ahead

The final 2024 Federal Open Market Committee (FOMC) meeting concludes on Dec. 18. The FOMC cited focus on supporting job growth while returning to their target inflation rate of 2%. 

Adobe forecasts that consumer spending will be up 8.4% this holiday season, totaling $241 billion, while the National Retail Federation (NRF) is predicting 2024 annual sales will grow a more conservative amount, between 2.5% and 3.5%. Early results from this holiday shopping season, combined with increasing consumer confidence and slowing inflation, may signal that those forecasts of robust holiday spending for 2024 are accurate. We will report on the peak holiday shopping days of Black Friday through Cyber Monday in the December edition of the Velera Payments Index.