What does the Houston economy look like through the eyes of our credit and debit cards? A new study from the JP Morgan Chase Institute analyzed debit and credit card spending patterns in 15 US cities. There’s a lot that it can show us about how spending patterns differ with age, income bracket, and location throughout the metro area.
Houston shows signs of growth reversal
This report looks at the stuff you’d put on a credit or debit card: groceries, gasoline, clothing, bar tabs. It doest look at the stuff that you’d pay by check or bank draft, like auto, mortgage, or tuition payments.
Overall, things are slowing down. Rapid growth from 2013-2014 led to a slowdown this year that was magnified by dropping gas prices. If gas prices drop and consumption remains the same, people spend less. All of the 15 metro areas studied had weaker 2015 numbers than the previous year.
But Houston represented one of the steepest declines in spending, with a -1.5% YOY growth rate in 2015 (down from 7.2% in 2014). It shouldn’t be surprising: Houston is suffering through the days of cheap oil. And this data stops at July 2015, when oil was $65 a barrel. It will be interesting to see the spending shift as oil prices remain low and the local economy weakens.
houstonians shop small in tough times
For “local consumer commerce,” Houston ranks in the middle of the pack. This metric looks at transactions that occur in the same neighborhood or metro area. Even though Houston is experiencing a slowdown, local spending with small businesses is a consistent growth area.
The growth reversal began in January 2015, and much of the cutbacks have been on fuel. This makes sense: Houston is a vehicle-dependent city, and lower gas prices means less fuel spending.
Around that same time, there was a slowdown in spending with large businesses.
This could be tied to lower gas prices as well, since most gas stations qualify as large companies. Update: no they don’t. But for 6 out of 7 months in 2015 (that’s all the study contained), spending with small and medium businesses is growing.
A couple of things jumped out at me after looking through the data about people in Houston spending money on credit and debit cards:
- The people with the least are growing the fastest. The bottom 20% of earners are the only segment that had consistent, month over month spending growth through July 2015.
- Young people spend money like no one else. Similarly, the under-25 segment experienced double-digit spending growth each month through July 2015. Our median age is 32, making the Houston economy very much powered by young people.
- Seniors cut back in tough times. The 65+ segment cut the most spending each month.
- Houstonians like restaurants. Even when other services floundered, restaurants experienced anywhere from 3% – 12% growth each month through July 2015. Hell could freeze over, and we’d thaw it with pho.
- “Same neighborhood” sales keep growing. Although spending tapered off considerably throughout 2015, same neighborhood sales were the strongest.
Does all of this sound like gibberish? It’s tough to talk about numbers or write about maps. Click on the image below to check out an awesome interactive visualization of spending data and the Houston economy: