News that consumer spending is down during the coronavirus pandemic is no shock, but a recent report lays bare just how much of a decline we can expect. A new report from Reuters shows that Chase credit cardholders spent 40% less in March and early April than they did in the previous year.
Chase Credit Cardholders Spending Down By 40%
According to information released by the JPMorgan Chase Institute, spending on non-essential goods fell dramatically in the specified period. The categories most impacted include retail, restaurants, and entertainment. There appears to be a correlation between these drops, the COVID-19 pandemic, and “stay-at-home” orders by many U.S. states.
As noted, spending on non-essentials was down 40% over the period. This breaks down as households making less than $39,000 making a 38% reduction in spending, and homes making over $92,000 reducing spending by 46%.
This drop in spending was eight times greater than the average drop in household credit card spending after unemployment under normal circumstances. This dramatic plunge further highlights the role of the coronavirus in cardholder spending. And given that over 32 million Americans now find themselves out of work, it only underlines the potential damage other banks and lenders are facing due to COVID-19.
“We Expect This May Change”
Diana Farrell, president and chief executive of the Institute, says the findings are dramatic but likely won’t last. “While surprising, we expect this may change over time as layoffs, furloughs, and unemployment insurance further impact families’ bank accounts,” she said in a statement released by the bank.
More Information About the Study
The surprising aspect of these findings is that they only cover Chase branded credit cards. The Institute only tracked spending with Chase Freedom, Ink, Sapphire, and Slate credit cards from March 1 to April 11. This means the results do not include co-branded credit cards, like Amazon Prime Rewards Visa Signature or Southwest Rapid Rewards® Premier. The study also omitted Chase debit cards and cash payments.
Related Article: CFPB Report Details Impact of Coronavirus on Credit Card Applications
