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Road to Recovery: The Cautious Rise of the U.S. Consumer

By Nitin Sumangali

9-13-13_thumbThe U.S. economic recovery continues to move in a jagged line upwards, with improvements in employment, the stock market, and consumer confidence propelling the economy in an overall positive direction—a conclusion supported by the findings of this, the fourth MasterCard Global Insights study of the credit/debit dynamic among U.S. consumers. Since 2009 MasterCard’s analysis has offered the opportunity to take a historical view of changes in attitudes and behaviors among U.S. consumers as regards their spending, borrowing, and choice of tender. Looking at a single economic data point at a singular point in time might give a reader a skewed view of the economy; offering the longer-term view, MasterCard’s analysis is able to differentiate long-term trends from noise in the data and gain a clear-eyed view of the improvements in U.S. consumer behavior.

  • MasterCard’s analysis of publicly available industry data shows that in 2012, U.S. credit card volume grew by $172 billion year-over-year, or 8.4 percent—the result of both strong increases in discretionary and non-discretionary spending and $7.7 billion in spending that shifted to credit cards from debit and prepaid cards, confirming a secular trend Insights first spotted in 2011.
  • In 2012 publicly available data showed that U.S. debit and prepaid card volume grew $129 billion, or 7.0 percent-on the back of strong spending growth of $137 billion.
  • From 2008 to 2012, U.S. credit card volume grew by 14.4 percent, or $280.4 billion, primarily from reenergized consumer spending. During this period, approximately $141 billion of spending shifted from credit to debit, primarily in the early years of the financial crisis; in recent years the trend has reversed, with spending flowing from debit to credit.
  • In that same four-year period, U.S. debit volume grew by 44.0 percent, or $603.5 billion, due to general spending growth as well as shifts from credit cards and cash.
  • Consumer confidence has shown significant improvements as anxieties about financial situations and ability to pay bills have decreased since the start of the crisis.
  • Rewards continue to be an important feature/function driver for credit card spending as consumers look for more value from their payments products.
$172 billion annual US credit card volume growth in 2012
In U.S. $Billions

Source:: Nilson Report Issue 1011, Issue 988. MasterCard Advisors, Discretionary Freedom Index, 2012.