Hot off the press yesterday afternoon was this headline from MarketWatch – “US consumer credit down record amount in July“. According to the online subsidiary of The Wall Street Journal US consumer credit fell for a record fifth month in a row and has fallen every month but one in the past ten. The news is even better in the sub-category of credit card debt.
Has the consumer learned their credit-aversion lesson yet? Ask this question of any cash manager at a bank – whether in retail (Branch and ATM) or in vaults and their answer is likely to be in the affirmative. I have not heard from any of my cash management network that the demand for cash has started to fall off in recent months. In fact anecdotal evidence would seem to support the idea that we are all using our cash – and only cash – as a simple yet effective way to control our spending and consequently bolster our meager savings.
I have not heard from other jurisdictions around the world but I am sure that in any country that has been punished by the economic downturn, the people have turned back to cash as their way of controlling their own spending. Of course this resurgence in the use of cash requires that their be more cash in circulation. As we all know the US has been printing new money at a dizzying pace so availability shouldn’t be a problem, notwithstanding the inflationary risks such activity threatens us with.
I still remember when I got into this business over a decade ago. Friends and family were quick to point out that we were speeding towards a cashless society and that my new chosen career would in all likelihood be short lived. I guess no one truly has a crystal ball. I can’t see cash going away in my lifetime, or even that of the next generation. So the answer to the question posed in the subject of this post is likely a resounding yes! Cash is quickly becoming king again!
As always, your comments are encouraged and always welcome!
psst… Ben, I think it’s working!!
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Cash may be holding it’s own right now, but will it last? There can be no reasonable argument made that cash is the more efficient payment choice. Even with all the technology developed over the past 10 years it still has to be touched over and over again and transported from location to location. Headcount and fuel are not getting cheaper. Bigger than both of those will be the cost of insurance to the Armored industry. It won’t be overnight, but once the economy stablizes the long path of decline wll continue. The good news for all of us in this niche, there is still a lot of work to be done before it is over. At the end of the day card use is not declining. Just a change in which account we are accessing when we use it.
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