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Dive Brief:
- A monthly U.S. retail spending report from Mastercard released Thursday showed that U.S. retail sales, excluding automotive sales, rose 6.9% year-over-year in February. The figures were not adjusted for inflation, according to a release on the report.
- While e-commerce sales increased 13.2% from a year ago, in-store sales posted 5.5% growth in the same period. The report also found that apparel sales and department store sales climbed 3.9% and 5.6%, respectively, compared to February 2021.
- Meanwhile, spending with restaurants and airlines increased 14.2% and 15.6%, respectively, and lodging sales jumped 42.7%, according to the report.
Dive Insight:
The report from the Purchase, New York-based card network company attributed the increase in restaurant, airline and lodging spending to continued consumer demand for travel and experiences leading into the spring break season. It also pointed to the Valentine’s Day holiday in February as a driver for gifting sectors, such as clothing, department stores and jewelry.
“Consumers have remained resilient, prioritizing discounts where possible to counteract inflationary pressures,” Mastercard Senior Adviser Steve Sadove said in the company’s statement.
The rise in non-automotive retail sales comes as consumers accumulate record-high credit card debt. In Q4 2022, consumers’ credit card balances rose 6.6% from the previous quarter to $986 billion, exceeding a pre-pandemic peak, according to a February report from the Federal Reserve Bank of New York’s Center for Economic Data. Consumers in their 20s, 30s and 40s had higher rates of delinquency than credit card holders in their 50s, 60s and 70s, according to the report.
Though consumers’ rising credit card debts are a headache for them, increased consumer spending has benefited Visa, Mastercard and American Express as they brace for a potential recession.
Mastercard’s net revenue got a 12% bump in Q4 2022 compared to 2021. Per American Express’s Q4 2022 results, the credit card company’s quarterly revenue climbed 17% year-over-year. Meanwhile, Visa’s fiscal Q1 2023 results for the same period released in January showed a 12% increase in revenues compared to the year prior.
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