Central Texas Consumers Remain Cautious About Spending

Results from new UFCU Spending Index show increases in spending and credit utilization; decreases in savings

AUSTIN, Texas, August 14, 2023 — UFCU, Austin’s largest locally-based and Member-owned financial institution, today announced the findings from its first quarterly “spending index.” The data, aggregated from UFCU’s approximately 230,000 cardholders in the Central Texas area, depict spending trends over the first half of 2023.

The current interest rate environment and inflation have slowed consumer appetite for both lending and spending, and many financial institutions are expecting at least one to two more rate hikes before the end of the year, which could further cool consumption. In Central Texas, spending in raw dollars is up by 3.4% year over year comparing the first half of 2022 to 2023 — largely attributable to the annual inflation rate which was measured at 3% in June. However, spending at the individual level has decreased by approximately 1-2%. Seemingly, consumers are being more cautious on how — and where — they spend their money.

Despite the caution, most spending categories are seeing increases:

Saving habits also have been impacted on the national and local levels. In May 2023, the national Personal Saving Rate as reported by the U.S. Bureau of Economic Analysis was 4.6%; well below pre-pandemic levels of 8-9%. UFCU data shows that Central Texas savings and money market balances declined year over year by about 14% — signaling a fiscal tightening at the household level.

One significant difference in national spending versus those in Central Texas related to travel-related expenses. According to a July study from McKinsey & Company, consumer spending on travel increased at a slight 1% in May whereas in Central Texas, spending on travel decreased across the board with auto rentals down 3.7%; airlines down 11% and lodging down approximately 28% in the same time period.

The current state of the economy has pressed many people’s access to funds and driven credit utilization and balances upward as they need extra access to funds. For the first half of 2023, year over year balances in Central Texas are up approximately 16% and utilization is up about 2.4%. On a positive note, credit card delinquency has started to trend back down.

“While spending and credit utilization are up moderately, consumers in Central Texas are, on balance, taking a cautious approach to managing their household spending,” said UFCU Chief Executive Officer Michael Crowl. “Inflation and rising rates are certainly impacting people’s daily lives and choices, both of which result in lower rates of saving. This may continue into the second half with student loan payments resuming.”

Despite recent efforts to forgive student loans balances, interest accrual and required payments will begin again this fall. Nationwide, student loan balances have reach $1.78 trillion. Consumers will likely need to revisit household spending to accommodate these payments.*

About UFCU
As a Member-owned, not-for-profit financial cooperative, UFCU is passionate about helping people and their Members improve their lives to create a financially healthy community. With more than 366,000 Members in Central Texas and Galveston County and total assets under management of $4.676 billion, UFCU offers a variety of products, services, and education programs to empower Members in achieving financial health. More information about the credit union can be found on its social media platforms: Facebook, Twitter, Instagram.

Opinions, analyses, estimates, forecasts, and other views of UFCU’s Analytics Group included in these materials are based on a number of assumptions, and are subject to change without notice. Unless otherwise indicated, any data contained herein is presented in aggregate form, and cannot be used to identify any individual or entity. Although UFCU’s Analytics Research Group bases its opinions, analyses, estimates, forecasts and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the UFCU Analytics Research Group represent the views of that group as of the date indicated and do not necessarily represent the views of UFCU, its management or members.