As we present the August edition of the PSCU Payments Index, the nation finds itself once again facing unprecedented times. Just as the country was beginning to emerge from COVID-19 throughout the summer, the surge of the Delta variant has turned back the clock on the pandemic. Yet as consumers have grown more accustomed to change over the past 17 months, the economy continues to demonstrate its resilience. While the mix of spend has shifted, overall consumer spending continues to recover and adapt in the changing environment.

Despite the anticipated ebbs and flows of unfolding events, we continue to see positive signs of economic recovery and increased consumer spending and confidence. In the August 2021 edition of the PSCU Payments Index, we revisit a Deep Dive into the Restaurant sector, which we covered previously in our weekly Transaction Trends earlier in the pandemic. We hope that the demographic data from this sector of consumer spending, along with insights on consumer confidence in spending, economic and social activities, will help our financial institutions make informed decisions and help keep their cards in the coveted top-of-wallet position.

Key takeaways include:

While no dramatic fluctuations in consumer behavior were seen for the second straight month, consumers remained resilient with strong spending. At the same time, the impact of the Delta variant, along with other economic influences like the stopping and re-starting of government assistance programs, are intersecting to create underlying uncertainty for consumers.
Restaurants (this month’s Deep Dive) saw purchases up 28% for debit and 26% for credit compared to July 2019. Within the Restaurant sector, the rebound to in-person dining is being met with mixed sentiment, with a much more pronounced return to restaurants among younger generations. For July, the Gen Z population (ages 18-22) had the biggest increase in spending compared to 2019, with debit purchases up 66% and credit purchases up 72%. Baby Boomers and above had modest growth, with debit purchases up 5% and credit purchases up 9% compared to 2019.
July CPI-U remained at a 13-year high of 5.4% annually. Increasing housing costs – including rising rent and home prices – collectively pose a substantial threat to inflation and are being closely watched by both the Fed and the White House. On a positive note, while the annual July CPI-U remained the same from June, the July impact to the annual metric was the smallest in the past 15 months, posting at 0.5%.

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