Consumer Sentiment Influencing Spending Behavior Per Velera Payments Report

By Roy Urrico

While the impact of the Trump Administration’s tariffs is not yet reflected in its April data, the Velera Payments Index indicates it is beginning to influence spending behavior.

St. Petersburg, Fla.-based Velera, which describes itself as the nation’s premier payments CUSO, designed the Velera Payments Index to help credit unions and other financial institutions make strategic, data-informed decisions. Beginning with the April edition, the Payments Index will retain its monthly timetable and will introduce a new quarterly format: a “base” edition followed by two months of “Deep Dive” reports.

Chuck Fagan, president and CEO at Velera.

“Velera is excited to launch the next evolution of our Payments Index, one of the credit union industry’s best resources for timely data and insights on payment transactions. The evolution of this monthly report has been extraordinary; since its origin as a weekly transaction tracker throughout the first year of the pandemic, the Payments Index has emerged as one of Velera’s key pieces of thought leadership, offering actionable data, insightful trend analysis and prescriptive content for credit unions,” said Chuck Fagan, president and CEO at Velera.

Weighing the Buying Mood

“Consumer sentiment continues to erode, while both economists and Fortune 50 CEOs warn of the ripple effects – rising inflation, higher unemployment and the possibility of a recession if trade flows are significantly disrupted,” the Velera Payments Index noted. Early signs suggest that American consumers may be stockpiling essential imported goods in anticipation of price increases. As this situation unfolds, we will be closely tracking how these developments shape spending behaviors in the coming months.”

The Velera Payments Index also reported the Consumer Confidence Index declined for the fourth consecutive month in March to 92.9, with less optimism around future business conditions and income. Consumers 55 and older, followed by those aged 35 to 55, were the primary drivers of the 7.2-point drop. The University of Michigan Index of Consumer Sentiment dropped 11% from March to 50.8 in April – its second-lowest level in history – and has lost more than 34% year over year. Consumers across all ages, income and political demographics expressed pessimism and concern over anticipated upcoming price surges.

Source: Velera.

Looking at other Economic Numbers

• The Consumer Price Index (CPI) decreased 0.1% in March, bringing the cumulative 12-month rate of inflation up to 2.4%. The energy index dropped 2.4%, led by a 6.3% decline in the gasoline index. Food increased by 0.4%, with the indexes for food at home up 0.5% and food away from home increasing 0.4% over the month. Core CPI, which excludes the food and energy sectors, increased by 0.1% in March following a 0.2% decrease in February, bringing the 12-month Core CPI to 2.8% – the smallest 12-month increase since March 2021.

• In March, jobs grew by 228,000, with increases in healthcare, social assistance and transportation and warehousing. Federal government workers declined by 4,000 in March, following a decline of 11,000 in February. The U.S. Bureau of Labor Statistics (BLS) reported the overall unemployment rate increased slightly for March to 4.2%, or 7.1 million people.

• Growth rates softened for debit in March and moderated for credit. Debit purchases were up 4.0% and credit purchases were up 2.0%. Debit transactions were up 2.3% and credit transactions were up 2.1%. The goods sector was the top contributor to growth in debit purchases, followed by money services, with these two sectors accounted for just over 70% of the year-over-year increase.

• For credit purchases, the services sector was the largest contributor to growth for March. Within services, insurance sales/premiums were the top merchant category, up 8.8% compared to March 2024.

• Contactless “tap-and-go” transactions now make up over half of all card-present (CP) transactions on contactless cards. Digital wallets also continue to grow in popularity, with 9.9% of all debit transactions (CP and card-not-present) taking place via a digital wallet and 5.6% of all credit transactions (CP and CNP) via a digital wallet for March 2025.

• Overall credit card delinquencies for March 2025 were 2.31%, down 0.11% year-over-year. After peaking in January 2024 at 2.67%, delinquency rate growth has softened each month since the peak with an average reduction of 0.11% for each month of 2025. According to Velera, the monthly overall delinquency rate this year appears to be in line with historical first-quarter trends, as slower consumer spending following the holidays and the receipt of tax refunds typically drive decreases in delinquencies.