Falling gas prices may be good news for drivers, but not so good for the economy. A spending slowdown in April can be largely attributed to the biggest drop in the cost of fuel seen in more than three years, according to First Data Corporation.
The payment processing company released their monthly SpendTrend analysis for April 2013 this week. It tracks consumer spending on credit cards, debit cards, Electronic Benefit Transfer (EBT) and prepaid cards from one month to the next, comparing spending data in the same stores during the same month in previous years.
While March posted a consumer spending increase of 6%, April had only a 5.1% rise in spending. Consumers who pocketed savings at the pump appear to have socked them away rather than going on shopping sprees.
Other factors cited in the spending slowdown were an early Easter holiday, coming at the end of March and pushing holiday spending into the previous month, and a cold, wet spring that put a damper on travel plans and hotel spending. Looking at regional spending, there was a significant drop in purchases in the Northeastern U.S. during the second half of April, likely due to the tragic bombing in Boston and subsequent all-city lockdown.
Healthy increase in home spending, plus plenty of plastic
Spending at home specialty retailers like furniture stores, garden equipment stores and building supply stores posted an increase as people spruced up for spring.
Consumers weren’t afraid to pull out their credit cards either, as credit had its fourth straight month in a row outperforming debit cards. At the same locations, credit card use from March to April increased by 7.2%. Debit cards requiring a signature increased in usage by 5.2%, closed-loop prepaid card use grew by 4.7%, and personal check payments were down 3.8%. Debit cards requiring a PIN only increased in usage by 0.7%.