Atlanta -- Consumer spending reached a three-year low during the month of December, according to a report released Thursday by First Data Corp.
First Data’s SpendTrend tracks same-store consumer spending by credit, signature debit, PIN debit, EBT, closed-loop prepaid cards and checks at U.S. merchant locations.
Consumers stepped back from spending in December as the fiscal cliff debate continued, lingering effects of Superstorm Sandy persisted, and the initially less aggressive retail discounting environment for most of the month dampened shopping. Dollar volume growth was 4%, the lowest monthly growth in three years and a steep slowdown from the typical range between 6% and 10%.
Retail dollar volume and transaction growth slowed significantly from November as shoppers reigned in discretionary spending in the face of financial uncertainty. Retail dollar volume growth and transaction growth both hit 12-month lows at 2.9% and 1.4%. Most retail segments saw slower dollar volume growth compared with November.
Average ticket growth slipped to -0.5% as consumers spent cautiously. Retailers were more frugal with discounting strategies earlier in the month, which negatively impacted spending. As this appeared to negatively impact sales, many retailers then reversed course and rolled out more discounts later in the month to entice consumers and put a dent in the sluggish shopping season.
“Consumer spending took a big step back as concerns related to the fiscal cliff and the initially frugal discounting strategies by retailers’ dampened holiday spending,” said Rikard Bandebo, VP and economist, First Data. “Looking forward, consumer spending growth may slow as new fiscal policy is enacted in January and consumers take a small hit from the end of the payroll tax holiday. Fortunately, many consumer fundamentals are holding up well: job growth is steady, gas prices are falling, the housing market continues to turn the corner, and equity prices have also held up.”