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Credit card spending data tells a story of a complete recovery. Or is it a story about cash? – ForexLive


The latest numbers

JPMorgan is out with its latest credit/debit card spending data today and the trend is modest. There’s clearly been a flattening since mid-June and that’s something the Fed’s Barkin highlighted yesterday.

TD is out with a similar report for Canada and it paints an even better picture, with spending now higher year-on-year overall. The divergent trends in Canada and the US suggest it’s the resurgence of the virus in the US that’s probably behind the flatlining.

TD spending

What strikes me is that TD, JPMorgan and many others may be missing an obvious caveat. The reports are filled with analysis on different spending categories, online and plenty of talk about government benefits. What they’re missing is that people are almost surely using less cash than previously.

I can’t speak for everyone but it’s almost taboo to pay with cash at the moment. I probably pay with cash more than most people I know and at the start of the pandemic I made a large cash withdraw. I’ve spent almost none of it. There’s pressure (and rightfully so) to pay with a credit or debit card to minimize the passing and handling of cash.

I don’t know how much of a factor that is in aggregate but I suspect it’s significant and it means that overall spending is less than what credit/debit numbers are showing.

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