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Consumer credit card spending increases, economy shows slight forward momentum

Oct 05, 2012 Dave King

Consumer credit card spending increases, economy shows slight forward momentum
The slow pace of the economic recovery doesn't seem to have affected the electronic payments industry, with recent figures showing that consumers are using credit cards as a preferred means of payment.
 According to the Electronic Transactions Association, the industry remains in a strong position with second quarter figures for 2012 released in its latest U.S. Economic Indicators Report. The report, published for the benefit of ETA members, reveals consumer credit data that disagrees with a general perception of thrift and economy among shoppers. Increased spending
The figures for the second quarter of the financial year show that total spending on Visa and Mastercard brands increased by almost 9 percent from the same time period in 2011, and 10 percent from Q1 to Q2. The average transaction on these branded credit cards also grew, although consumer credit data shows that the number of individual purchases only increased by 1.2 percent at most. Debit cards issued by the same brands showed a decrease in transaction sizes of up to 3.6 percent, an indication that consumers may be looking to defer the costs of purchases through alternative credit. "ETA's U.S. Economic Indicators Report for the second quarter reveals that the electronic payments industry continues to perform well when compared to the rest of the U.S economy," remarked Jason Oxman, ETA chief executive officer. "While we continue to face tough economic headwinds, the report provides ETA members with a deeper understanding of industry trends and the U.S. economy so that they can better assess their position in the current economic climate." Slow forward momentum
The quarterly report is produced with analysis from The Strawhecker Group, and follows on the heels of the recent economic data released by the U.S. Commerce Department. According to Bloomberg, the figures seem to indicate a downward trend in business and consumer confidence, with manufacturing orders down and the economy showing only glacial growth. However, a closer inspection reveals that the U.S. economy is in relatively robust shape. House prices rose for the third month in a row, mortgage rates are at a record low and, although the Obama administration has been criticised for a steady unemployment rate, the figures show that there has been a net gain of 100,000 jobs since the president officially took office in January 2009. "Consumer confidence is going up, vehicle sales have been solid, home sales are up and retailers are reporting sales gains," said Joel Naroff, president of Naroff Economic Advisors.