Discover(R) U.S. Spending Monitor(SM) falls more than three points
in November as consumer confidence in personal finances and the
economy declines
RIVERWOODS, Ill.--(BUSINESS WIRE)--Dec. 5, 2007--Household
expenses and holiday shopping have consumers preparing to spend more
in December even as economic confidence has dropped to its lowest
level in more than six months. Despite anticipated increases in
seasonal spending, declining consumer confidence in the economy and
personal finances drove a 3.4-point decline in the Discover U.S.
Spending Monitor for November. Survey responses from 14,000 randomly
sampled consumers (500 each night from November 1-28) put the Monitor
at 93.4 compared to 96.5 in October.
Consumers Maintain Holiday Spending Even As Spending Expectations
on Household Expenses Rises
Overall, most consumers (51 percent) said they expect to spend
more money in December, hardly a surprise given the time of year. This
is compared to 35 percent who said they would spend more in November
and an average of 33 percent making similar claims about
month-to-month spending for the previous five months.
But rising expectations to spend more on gas, groceries and
mortgage costs also is a key driver of increased spending among
consumers. There was a striking 15-point increase - from 43 percent to
58 percent - in the number of consumers who said they expected to
spend more on household expenses in December than they did in
November.
To meet the increased household expense obligations in December,
more consumers said they were expecting to spend less in December in
virtually every other spending category tracked by the Monitor. For
example, 45 percent of consumers expected to spend less on
discretionary items like entertainment and electronics, an increase of
nearly four points from last month's survey, while 38 percent expected
to spend less on savings and investment, up from 34 percent last
month.
"The remarkable turn we saw last month in spending intentions
continued into November as gas and grocery prices remained high," said
Margo Georgiadis, executive vice president and chief marketing officer
of Discover Financial Services. "Consumers are doing their best to
adapt to the economic environment, spending more on the things they
need while cutting back on discretionary purchases and savings. It
will be interesting to see if unexpectedly high household expenses
temper holiday spending."
Indicators in the Monitor have so far shown steady holiday
spending despite the increase in the number of consumers expecting to
spend more on household expenses. Consumers had different opinions
about their spending pre- and post-Thanksgiving. In the weeks leading
up to the biggest shopping weekend of the year, as many as 55 percent
of consumers said they would spend less this year than last, while 43
percent said they would spend the same or more. The week after
Thanksgiving the number who said they would spend less on holiday
gifts this year slipped to 50 percent, while the number saying they
would spend the same or more jumped to 47 percent. Half of the
country's holiday gift-givers report they have at least started their
shopping, but only 13 percent say they are finished or just about
done.
Georgiadis noted that 18- to 39-year-olds were among the most
aggressive holiday spenders by a factor of two. At month's end, more
than 21 percent said they would spend more for the holidays than last
year compared to fewer than 10 percent for people 40 and over.
Majority of Consumers Still Managing Their Budgets to Have Money
Left Over, but Budgets are Tightening
Though a majority of consumers (51 percent) say they will have
money left over after paying December's bills, they are cutting deeper
into their monthly income to meet their obligations. In November, 25
percent of those with money left over said that the amount is less
than the previous month, a new high for the Monitor.
A trend may be developing among consumers anticipating an added
expense or an income shortfall over the next 30 days. The number
steadily increased over the last three months from 35 percent in
September to 41 percent in November.
"Consumers are definitely feeling the effects of higher costs,"
Georgiadis said. "But they continue to manage their finances to
account for the changing dynamics of the marketplace, as a majority of
them still have money left over at the end of the month and
three-quarters of them have the same or more money left over than the
month before."
Consumers Grow More Concerned About the Economy, Personal Finances
November marked a reversal for consumers as attitudes about the
economy and personal finances appeared to mirror each other. In
previous months, consumers remained consistently confident about their
personal finances in the face of growing economic concern.
Since Monitor surveying began in May of this year, the number of
consumers rating the economy as good or excellent fell to 28 percent,
a decline of nearly five points from last month. At the same time,
consumers giving the U.S. economy a poor rating rose to nearly 35
percent, an increase of nearly six points from the previous month.
Only 27 percent of consumers said that their finances were getting
better these days, a full four points lower than the previous month
and a new low for the Monitor. Conversely, a record 46 percent said
they felt their finances were getting worse.
"Consumers are growing increasingly concerned about the state of
the economy and their own finances," Georgiadis said. "Our survey
results suggest a possible crack in their resiliency to successfully
adapt their spending behavior and manage their budgets. Nearly half
feel their finances are getting worse and over 40 percent are
concerned about a shortfall of income. The crack may be temporary
since holiday spending will end this month. But for now, consumers
appear to be finding less wiggle room in their budgets."
About the Discover U.S. Spending Monitor
The Discover U.S. Spending Monitor released monthly, queried
14,000 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 percent.
About Discover Financial Services
Discover Financial Services (NYSE: DFS) is a leading credit card
issuer and electronic payment services company with one of the most
recognized brands in U.S. financial services. The company operates the
Discover Card, America's cash rewards pioneer, with more than 50
million cardmembers. Since its inception in 1986, the company has
become one of the largest card issuers in the U.S. Its Third-Party
Payments business consists of the Discover Network, with millions of
merchant and cash access locations, and PULSE, one of the nation's
leading ATM/debit networks. Discover also operates the Goldfish credit
card business in the United Kingdom. For more information, visit
www.discoverfinancial.com.
CONTACT: Discover Financial Services
Matthew Towson
224-405-5649
SOURCE: Discover Financial Services
