American consumers are putting the brakes on spending as intensifying inflationary pressures — notably high gas prices — and persistent high employment fuel growing concerns about the economy, according to payment processor First Data.
According to payment-card data tracked by Atlanta-based First Data, growth in consumers’ total spending and shopping occasions slowed significantly compared with a year earlier.
First Data found in its May 2011 “SpendTrend” report that year-over-year dollar volume growth rose 6.6 percent in May, the lowest monthly growth rate of 2011. Year-over-year transaction growth of 5.1 percent was the slowest rate of growth in the past 12 months.
Payment-card spending at restaurants grew 6.4 percent in May, slightly below the total growth in such spending. Payment-card transactions for restaurants, however, increased 8.6 percent, possibly reflecting the same kind of pent-up demand that drove the highest transaction growth in three months for the hotel and travel industries.
The average ticket for payment-card transactions at restaurants fell 2.1 percent in May, showing that foodservice customers are still price-conscious and seeking the best deal. The decrease in average check showed sequential improvement from previous periods, however, as restaurants’ quarterly average tickets had declined by 4.3 percent, 4.3 percent, 3.5 percent and 2.7 percent from the second quarter of 2010 to this year’s first quarter.
More generally, First Data found that an increasing number of consumers are turning to their credit cards for spending, not just on big-ticket items but also to cover everyday expenses. Credit dollar volume grew 8.8 percent in May, which First Data said was significant because signature debit cards had been consumers’ preferred method of shopping every month for the past 12 months, except February 2011.
After lagging signature debit by far in terms of transaction growth in the past 12 months, credit cards nearly reached parity for transaction growth with signature debit, growing 6.5 percent in May compared with signature debit’s 6.9-percent growth rate.
First Data is a global technology and payment processing firm, which services more than five million merchant locations, more than 2,000 credit and debit card issuers, and millions of consumers worldwide.