Beware credit card consumption measures

Via the AFR:

Credit and debit card data from CBA and ANZ shows consumer spending has recovered so well that it is now above where it was this time last year.

For the week to May 22, personal spending is now in positive territory up 2.3 percentage on the same week last year, according to ANZ’s data while CBA shows that it is up 4 per cent.

…Victoria, with its strict restrictions, is lagging the pack on a spending recovery.

The state’s retail spending growth remains below all other states while total personal spending is 5.5 per cent lower than this time last year.

The strongest state according to ANZ’s data was Western Australia where personal spending growth is now 12 per cent higher than this time last year. CBA’s data points to Tasmania having the strongest bounce in personal spending.

Given our virus success it is likely we will see some pent-up demand before savings return. That said, I would be very cautious using this data.

CC data has all kinds of distortions in it and could be a signal of distress as much as growth.

I have personally seen the banks spruik these measures several times only to find it was uncorrelated to ABS data. In my experience, COMSEC is particularly guilty of overplaying this:

David Llewellyn-Smith
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