Travel sector suffers massive spending decline: PSCU study
Payment data from March confirms that the travel sector is taking a massive hit as more consumers stay home to protect themselves and their loved ones from the coronavirus.
Data from PSCU examined credit union member transaction behavior from March 2019 to the first three weeks of March 2020. Spending patterns noticeably changed amid the spread of the virus, with the travel sector sustaining a 30% spending decrease. The CUSO controlled its data by using the same PSCU owner credit unions and their members within the same categories year-over-year.
Gas transactions remained mostly flat, inching slightly higher by 0.04%. But given crude oil's price drop, gas prices are much lower in 2020 resulting in a 4.9% decline in total spending.
“While it is still in the early days to see the impact on consumer spending, we anticipate further erosion in many of these spending categories as the impact of the regional lockdowns continue,” Glynn Frechette, SVP of Advisors Plus at PSCU, said in a statement.
The economic outlook remains grim, with many experts forecasting double-digit declines in the second quarter. The United States reported its first COVID-19 case on Jan. 21 in Washington state. There are now has more than 86,000 cases as of March 27, according to data from Johns Hopkins University.
That said, year-over-year spending through March 21 ticked up by 9%. As consumers raced to prepare for social distancing and self-isolation, grocery stores and supermarkets saw huge increases in spending and transaction volumes. Transaction dollars were up 41.3% year-over-year. Average grocery credit card transactions were up 25%.
Drug stores and pharmacies also saw a 21.4% bump in total dollars spent. Many states have closed entertainment venues and non-essential retailers, but officials have designated grocery stores, pharmacies and other businesses as essential and these remain open to the public.
The consumer goods sector posted gains of 9.2% in total dollars spent, with a majority of that increase stemming from debit card usage. In fact, debit card purchase amounts doubled that of credit card purchases.
Consumers preferred using their debit cards over their credit cards, according to PSCU's recent findings. That echoes the results found in PSCU's Eye on Payments study last fall.
“With the pressures and unknowns of the ongoing economic impact from COVID-19, we are continuing to see consumers choose debit as their most preferred payment form,” Frechette said in the statement.