Bank of America, Citi, and Wells Fargo recently reported Q1 earnings while the US government released more data indicating a strong economic recovery is underway.
Here’s what you need to know:
Issuer recoveries likely stemmed from a Q1 2020 consumer spending influx. Consumer spending in retail and food services soared 27.7% YoY last month, following growth from January and February, when the metric climbed 7.4% and 6.3% YoY, respectively. Stimulus payments might’ve contributed to this boost—many consumers likely used cards to spend their new funds at stores and restaurants. States easing coronavirus restrictions during the quarter, which increased store capacities and reopened indoor dining, may have also contributed to gains by making it easier and more appealing for consumers to spend.
Bank of America, Citi, and Wells Fargo can implement new card perks to maintain recent growth as the economic recovery fuels consumer spending. The COVID-19 vaccine rollout should continue to help reopen and reinvigorate more of the economy, leading to increased employment and sustaining the jump in consumer spending. This could trickle into credit card spending growth like we started seeing in Q1 following last year’s pandemic-induced spending dip. As customers move back to nonessential spending like travel, issuers have an opportunity to implement new rewards on their cards and continue tweaking options—like Chase has done—to encourage consumer spending and lift volume even further.