But More Consumers Feel Economic Conditions are Getting Worse New Spending Category Questions Introduced in the August Discover Consumer Spending Confidence Monitor
RIVERWOODS, Ill., Sep 06, 2007 (BUSINESS WIRE) -- In a month of roller coaster-like changes in economic confidence,
consumers gave their personal finances remarkably consistent ratings,
according to the August Discover(R) Consumer Spending Confidence
Monitor(SM). The Monitor fell 2.4 points to 94.8 for the month as the
number of consumers who said the economy was worsening increased from
58 percent to 62 percent. Yet 41 percent of the same random sample of
15,000 U.S. adults also rated their personal finances as good or
excellent, virtually unchanged from July and within a percent of the
Monitor baseline established in May of this year.
Consumer confidence in the U.S. economy rose and fell week to week
during this month as concerns about the housing market and sub-prime
mortgage challenges led the business news. The Monitor hit a high of
96.8 the week ending August 8 and a low of 92.5 for the week ending
August 15. The Monitor stood at 94.5 for the last week of the month.
Through it all, consumers remained relatively upbeat about their
personal finances, rating them much higher than they rated the
Personal Finance Confidence Remains Stable, Majority Have Money
Left Over, But Consumers are Growing More Concerned About the Economy
Consumers' views about their personal finances virtually mirrored
last month's survey as 41 percent rated their personal finances as
good or excellent. The relatively upbeat view from consumers about
their current personal finances comes as nearly 51 percent of them
said they were managing their budgets well enough to have money left
over. This is unchanged from last month's survey. Of those who had
money left over after paying the bills, nearly 78 percent think they
will have the same or more money left over next month.
But consumers are growing more concerned about the economy.
Sixty-five percent rated the economy as fair or poor, a 3-point
increase from last month's survey. Only 33 percent rated the economy
good or excellent, a 2.5- point drop from July. Consumers also feel
economic conditions are getting worse. Sixty-two percent feel the
economy is getting worse, the highest percentage the Monitor has
reported since its May inception. Only 19 percent feel the economy is
getting better, the lowest number the Monitor has reported. Sixty-six
percent of married people with children feel the economy is getting
worse, 4 points higher than the average.
The pessimistic view by consumers on the economy is coupled by
more consumers feeling that their personal finances are getting worse.
Forty-three percent feel they are getting worse, reversing a decline
from June to July, while only 31 percent of consumers feel their
personal finances are getting better.
"Most consumers still feel relatively upbeat about their current
personal financial status. With a majority of them having money left
over after paying the monthly bills, this may be why consumers
sustained their spending throughout August," said Margo Georgiadis,
Executive Vice President and Chief Marketing Officer for Discover
Financial Services. "But declining confidence about whether their
personal finances will get better as well as growing concerns about
the economy, especially among married people with children, may be an
indicator that consumers might tighten their wallets next month."
Majority of Consumers Maintaining Their Spending Confidence,
Numbers Increase Among Consumers Expressing Spending Caution in the
The outlook on the economy didn't appear to slow spending in
August as 84 percent of consumers said they spent the same or more
than they did last month and 82 percent are expecting to spend the
same or more next month.
While a large majority expressed confidence in maintaining their
spending, there were some signs of caution. Just over 30 percent (30.3
percent) of consumers are expecting to spend more in the next month.
This represents a 25 percent drop since the Monitor's inception four
months ago. Sixteen percent of consumers also are expecting to spend
less next month; a 2.5- point increase from July's Monitor and the
highest percentage the Monitor has reported.
"Consumer spending confidence has not dissipated considerably from
the previous month," said Georgiadis. "Nonetheless, we have seen a
noticeable decline since the Monitor's inception in the amount of
people expecting to spend more in the next month. Economic uncertainty
inspires caution and more consumers may be acting on that instinct."
Still, nearly half (49 percent) of consumers said they did not
expect any added expenses or an income shortfall to curtail their
spending in the next 30 days, a good sign that consumers will sustain
Younger adults (18-29) did not fare as well as 49 percent said
they were expecting an added expense or income shortfall, a 5-point
increase from last month's survey. This is a turnaround from last
month's survey in which younger adults expressed more confidence in
their personal finances and the economy.
Consumers Prioritize Expenses According to Their Needs, Hold the
Line on Discretionary Expenses
August was the first month during which the Monitor surveyed
Americans on their spending intentions in various expense categories.
At first glance, numbers appear to support the notion that consumers
may be spending according to their needs. Over 90 percent said they
expected to spend the same or more in the next month on household
expenses like groceries, gas and utilities.
Fifty-seven percent said they would spend the same or more next
month on major personal purchases such as travel and education.
Sixty-one percent said they will save the same or more next month. But
when it comes to discretionary expenses for things like dining out,
going to movies, attending sporting events and personal hobbies, more
than 4 out of 10 consumers (43 percent) said they intended to spend
less next month.
"Consumers seem to be showing some resilience in the face of
economic uncertainty," said Georgiadis. "They may be prioritizing
their spending to accommodate their own needs. This may help explain
why the economy has been able to withstand the mortgage industry's
challenges and the down housing market. It will be interesting to see
whether they establish a trend by holding the line on discretionary
expenses as we gather more monthly data."
About the Discover Consumer Spending Confidence Monitor
The Discover Consumer Spending Confidence Monitor, released
monthly, queried nearly 15,000 adult consumers in August 2007 about
spending intentions and capacity. The survey also asked for opinions
on the U.S. economy and ratings of personal finances. The survey was
conducted by Rasmussen Reports, LLC, an independent survey research
firm (www.rasmussenreports.com). It has a margin of error of +/- 1
About Discover Financial Services:
Discover Financial Services (NYSE: DFS) operates the Discover Card
with more than 50 million cardmembers, the Discover Network with
millions of merchant and cash access locations, and the Goldfish
credit card business in the United Kingdom. Discover Financial
Services also operates the PULSE ATM/debit network, which serves more
than 4,400 financial institutions and includes nearly 260,000 ATMs, as
well as POS terminals, nationwide. For more information, visit
SOURCE: Discover Financial Services
Discover Financial Services