If you can believe, the holiday shopping season is officially under way and with seasonal decorations appearing in some stores as early as October, we all feel like it starts earlier ever year. Equifax was curious to know just when the holiday season starts and decided to look at four years of data around consumer debt to understand consumer behaviors during the holiday season.
So what did they learn? First, consumers are continuing to focus their shopping around the days before and after Black Friday, although the day after Thanksgiving does continue to be a highly active. In fact, for the past four years, the Sundays before and after Black Friday have seen a fairly consistent 50 percent increase in the opening of retail credit card accounts over an average day in November or December. New retail credit card openings peak on Black Friday, when consumers on the average have continued to open nearly 3 times more retail credit card accounts.
They also found learned that since 2012, on the average, in November and December, furniture stores have been the top issuer of store credit ($851M), followed by department stores ($790M), jewelry ($451M), electronics ($365M) and clothing ($241M).
Gunnar Blix, Equifax Deputy Chief Economist, says that furniture stores tend to have high-value incentives linked to store credit which drive purchases and this likely accounts for their leading position in terms of credit issuance in the retail credit space.
He also points out that even with compelling incentives across all the shopping categories, since 2012 Equifax has been noticing a modest trend toward consumers showing more restraint in credit card usage.
To view an infographic with the full analysis, visit: Black Friday Historical Trends
Consumers in each of the nation’s 25 largest cities added debt throughout the months of July, August, and September. This is compared to the previous year, ending a multi-year trend in which several cities continued to show declines in overall consumer debt, according to the latest Equifax National Consumer Credit Trends Report. “Consumers appear more confident in the economy and are moving forward with their lives and borrowing money again,” said Assad Lazarus, Senior Vice President, Product and Customer Experience at Equifax Personal Information Solutions.
Earlier in 2015, when Equifax last reported a similar report, 19 of the nation’s largest 25 cities showed declines in consumer debt compared with a year ago. The new report shows a reversal of this trend; all major metro posted gains, with the largest experienced by Houston (+7.4%), Denver (+5.4%), Dallas (+4.8%) and Orlando (+3.8%).
“Overall, the data paints an encouraging picture of the American consumer and the U.S. economy,” said Lazarus.
What else does the report tells us about consumer financial behavior across the United States?
- Mortgage markets are improving, in part because mortgages are the largest single component of consumer debt. In fact, just three major metropolitan areas – New York, Cleveland, and Miami – saw a decrease in those balances. This is a marked difference from past reports where many cities showed a similar decline.
- Non-mortgage debt, meanwhile, continues to show significant year over year growth in every major U.S. cities. Nine cities experienced double-digit increases in non-mortgage debt compared to a year ago, with Orlando leading the way with an increase of 13.9% and Miami close behind at 13.2%. Again, this suggests that consumers remain confident and are poised for growth.
- Detroit had the smallest amount of non-mortgage growth at 4.9%. In fact, only Detroit and Minneapolis experienced a lower rate of year-over-year growth in non-mortgage debt through the third quarter of 2015 compared to the same time period in 2014.
Dennis Carlson, Deputy Chief Economist with Equifax, contributed to this article.