Leading economic indicators and consumer sentiment show positive momentum for retail, lending and banking sectors
The numbers are in, and the holiday spending season opened in a powerful position with in-store spending on Black Friday up an impressive 12% over last year, according to Mastercard data. Cyber Monday also delivered for online sellers with sales growing 5.8% year-over-year, setting a new annual retail record. “Shoppers are returning to many of their pre-pandemic routines and retailers expect a more typical holiday season than the last two years in the pandemic,” according to CNN’s analysis. On the heels of easing inflation, this kind of robust consumer spending is another sign of strength building in the post-pandemic economy.
For financial services – credit and lending in particular – the holiday season presents another opportunity to provide valuable services and support. Reporting shows renewed demand for credit products and buy now pay later (BNPL) loans to help consumers stretch their spending dollar. In fact, a survey of 1,000 consumers in Forbes Advisor and OnePoll found that “64% say they’ll use BNPL to buy gifts this holiday season.” CNBC reports that while “high prices continue to weigh on most households’ financial standing” shoppers are finding solutions by leaning on “credit cards and flexible payment plans to make their purchases.”
“The continued strength of the US consumer is nearly single-handedly staving off recession in the US,” says Bank of America CEO Brian Moynihan. “Americans are still employed, they still have money in their bank accounts and they’re still spending that money.” While consumer confidence is high, financial experts stress that shoppers should remain on track with their budgets. Whether it’s using a balance of debit and credit or paying off BNPL or credit cards by January, consumers are taking “even greater proactive steps to ensure they don’t overspend this holiday season,” according to findings in the TD Bank 2022 Merry Money Survey.
Trends leading up to the holiday season were so powerful that industry giants like American Express set aside recession planning and shifted their efforts toward leveraging the tailwinds of the economic resurgence. “The holiday season looks really strong,” finds Steve Squeri, chair and CEO of American Express as reported by American Banker. “If you are traveling, you’re going to be eating at restaurants and bringing presents with you.” The credit brand realized 2022 expansion through consumer acquisition and activity. “Eighty percent of our growth is transactions right now,” Squeri said. “It’s not inflation, it’s a higher level of engagement.”
For the latest on the banking economy, stay tuned to Believe in Banking’s continuing coverage of top trends and topics. For the banking industry’s best practices, visit Adrenaline’s Insights. And if you’re a banking leader looking for brand to branch strategies customized for your institution, contact our banking and credit union experts via email at info@adrenalinex.com.