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Consumers tighten faucet a bit

FirstData report tracks September slowdown

Less back-to-school spending, lower gas prices, and unseasonably warm weather in many areas reduced consumer spending growth in September, according to the latest FirstData SpendTrend report. Less back-to-school spending, lower gas prices, and unseasonably warm weather in many areas reduced consumer spending growth in September, according to the latest FirstData SpendTrend report.

Flagging consumer confidence due to the federal spending debate didn’t help spending patterns in September, but more workaday causes combined to drive down consumers’ own spending to the lowest growth rate this year since April.

The latest SpendTrend report, from FirstData, indicates that three factors influenced slowing spending in September, when consumer expenditures at point of sale grew at 5.3% versus 7.3% in August. They were:

Reduced demand for fall merchandise. With the exception of the Northeast, warmer than expected temperatures kept people from buying warmer clothing and other autumn goods. All categories of retail spending were off from August levels.

Falling gas prices and gas usage. FirstData noted that gas prices continued to fall broadly in September, and consumers also bought less fuel. These trends produced negative growth—a rate of -2.4%—in this spending category.

Falling back-to-school spending also contributed to the pattern.

Bucking the trend was spending on building materials and supplies, which saw a 10% growth in volume.

FirstData reported that consumers showed an ongoing preference for credit cards over debit for the ninth straight month. The company said credit card volume growth outpaced both PIN and signature debit. However, year-over-year credit card volume rose by 5.8%, versus the 8.3% rate seen in August.

“Shoppers were likely more cautious about utilizing credit to sustain spending,” FirstData analysts said. The report pointed out that spending on eating out grew at a slower rate in September compared to August, due to more cautious spending.

PIN debit growth, in terms of transactions, rather than dollar volume, outran credit card growth and signature debit growth for the first time in nine months, according to the report. On the other hand, PIN debit growth fell behind the other two categories in terms of dollar growth. FirstData blamed this in part on falling gas prices, as PIN debit cards are frequently used to buy fuel at the pump.

SpendTrend is based on consumer transactions at the point of sale in FirstData’s proprietary payment networks. For more information about SpendTrend, click here.

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 Bankers Exchange and digital content manager of www.bankingexchange.com. Previously he spent 36 years on the staff of ABA Banking Journal and 22 years concurrently as editor of ABA Bank Directors Briefing. 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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