Report Finds Average Credit Card Spending Falls 40 Percent

May 18, 2020Banks & Credit Unions, News

Last week, the JPMorgan Chase Institute released a report featuring new data on household credit card spending, finding a 40 percent decrease attributed mostly to the ongoing coronavirus pandemic. The report studied anonymous consumer credit card transactions from roughly 8 million families throughout the 50 states between March 1 and April 11.

As the national emergency was declared on March 13, credit card spending began to plummet compared to the previous year, eventually reaching a decline of 40 percent by the end of March.

“Changes in spending follow a distinctive pattern—spend is stable through the beginning of March, then declines precipitously by 40 percent relative to 2019 from the second through fourth week of March,” the report reads. “It then appears to stabilize at this lower level in the first two weeks of April.”

According to a summary of the data in Politico, “spending cuts on non-essential goods and services, like retail, restaurants, and entertainment, account for nearly all of the total spending decline. Spending on essentials, such as transportation, groceries, and healthcare, initially spiked 20 percent before falling back, while spending on non-essentials declined by 50 percent.”

“Spending spiked dramatically on groceries, as well as at drugstores initially,” the report continued. “Spending at restaurants was down about 70 percent.”

The report also notes that the decline in spending was impacted by closures of non-essential businesses.

“Beyond the mechanical effect of social distancing regulations, individuals may also have independently curtailed spend in certain categories to avoid risk of infection or as a response to income loss,” the report reads.

Spending dropped substantially for workers in all industries and for households of all incomes. However, the report found slightly larger dips for higher-income households, likely because non-essentials represent a larger portion of spending for those households.

Policymakers are observing the real-time data provided from credit card transactions, as it gives insight into how the economy is recovering and how the country is reopening. “We will continue to track and disentangle these dynamics over time using administrative banking data,” the report concludes.





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