Credit card spending rebounds from pandemic plunge

Chase data show card spending is down 11% year-over-year as of July 4 – much better than the 40% deficit recorded in March


Chase data show credit card spending is down 11% compared to this time last year. That’s not good, but it’s a lot better than the 40% year-over-year plunge recorded in March. What do these surprising numbers say about consumers’ behavior in the pandemic?

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I have been fascinated by the extremely detailed daily spending tracker that Chase has been publishing throughout the COVID-19 pandemic.

As of July 4, the seven-day consumer card spending average was down 11% year-over-year. As recently as March 16, the figure was in positive territory, but by March 31 it was down about 40%. That low was re-tested on April 15, then there was a strong two-month surge that brought the average to about 10% below 2019 levels as of mid-June. It has hovered there for the past few weeks.

Sometimes, I start to forget how extraordinary this year has been. In more normal times, a 10% drop in credit card spending would be cause for serious alarm, because about 70% of GDP is driven by consumer spending.

Now, however, the general sentiment on Wall Street seems to be “well, it could have been a lot worse.” The NASDAQ hit a record high earlier this week and the S&P is within shouting distance of its high-water mark. (Investors are also looking ahead, although there are warning signs – more on that in a bit.)

See related: Card balances under $1 trillion for the first time since 2017

We’re setting the wrong kinds of records with respect to the virus

Nationwide, confirmed cases have been surging since Memorial Day, led by large states such as Florida and Texas. The Chase tracker isolates several states, and it’s notable how little variation has been observed.

For example, credit card spending is currently down 7% in Florida and New York (again, the seven-day average represented year-over-year) and 10% in Texas. New York’s virus surge came much earlier, but throughout the pandemic, the states’ line graphs have been remarkably similar. That was true when New York was in the thick of it and Florida and Texas were relatively unscathed, and it’s still true now as the roles have reversed.

My hypothesis is that confirmed COVID-19 cases are only part of the story. So are governors’ stay-at-home orders. Shockingly, there’s very little variance between the consumer card spending in states which never had such an order (-9% as of July 4), the states which still had orders in place on May 19 (-9% as of July 4) and the states which had lifted their orders by May 18 (-7% as of July 4).

See related: How I’m spending differently during the pandemic

Reopening doesn’t mean customers flocking back

Our recent pandemic spending survey further amplified this point. We found that even after restrictions ease, 45% of Americans plan to spend less on movie, sports, concert and theater tickets, 44% plan to cut back at bars and 37% will pare down at restaurants. Just 19% intend to up their spending at restaurants, 16% at bars, 14% on sports, concerts and theater performances and 12% at the movies.

Besides the health concerns, some people likely learned to live without these discretionary expenditures – or at least learned to live with fewer of them for a while. Plus, with an 11% unemployment rate, many households don’t have much money for discretionary spending right now.

That brings us back to the virus itself, which is causing a fresh wave of restrictions. For example, in late June, Texas re-closed bars and tightened restaurant occupancy limits. California re-shuttered bars and indoor dining statewide and implemented even stricter guidelines on other businesses in many counties. And in early July, Miami re-closed restaurants and gyms.

Around the same time, Goldman Sachs cut its Q3 2020 GDP growth forecast from 33% to a still impressive 25% (annualized).

“The healthy rebound in consumer services spending seen since mid-April now appears likely to stall in July and August as authorities impose further restrictions to contain virus spread,” the firm wrote.

See related: Planning a socially-distanced summer vacation

Old shopping habits die hard

There’s not much variation between card-present and card-not-present spending. This is basically a proxy for in-person versus online shopping.

According to the Chase data, we’re roughly back to where we were in mid-February (with about 60% of transactions taking place with the card present). The percentage swung as high as about 70% in mid-March and as low as about 50% in mid-April. It has since found a more normal level.

That’s really surprising. So is the new eMarketer report that projects e-commerce to grow 18% this year with brick-and-mortar sales falling 14%. E-commerce grew 15% last year, so that’s not much of a jump.

I expected a much bigger rise in e-commerce because of the pandemic. I suppose old habits die hard, and shoppers still like getting stuff right away, even if they have to venture out of their bubble to pick it up. eMarketer says curbside pickup is up 60%.

Bottom line

Everybody has to make their own decisions about all of this. My general advice is to take a fresh look at your budget and your credit cards, because chances are, your habits have changed a lot in the past few months. You might need to make some adjustments in order to maximize rewards and limit debt.

Have a question about credit cards? E-mail me at and I’d be happy to help.

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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