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Discover(R) U.S. Spending Monitor(SM) Down Nearly a Point in June

High Gas and Food Prices Continue To Hurt Discretionary Spending,

                    Dampen Views About The Economy

Survey: Nearly 62 Percent of Consumers Are Altering Vacation Plans

in the Wake of High Gas Prices, 15 Percent Cutting Vacations First to

                              Compensate

RIVERWOODS, Ill.--(BUSINESS WIRE)--July 9, 2008--The Discover U.S. Spending Monitor fell nearly a point in June to 85.9, as consumers struggled with rising prices for essentials and continued to lose confidence in the nation's economy. Economic confidence hit a new Monitor low, falling in June to a level that is nearly 30 points lower than a year ago.

June is the sixth month in a row that consumer attitudes about the economy have trended downward while spending intentions have risen with living expenses rising beyond their control. The circumstances have created a balancing act for consumers who are spending less for discretionary items to compensate for higher costs for necessities. So far, consumers have been resilient. But there are signs the strain is beginning to show as more consumers are showing less wiggle room in their budgets.

Consumers Cutting All Discretionary Spending Areas as They Prepare to Spend More on Essentials

In a month when gasoline prices rose to new highs and food prices continued to surge, a majority of Americans (55 percent) spent more in June than May and almost half (47 percent) prepared for higher expenses in July.

Since January, there has been a 50 percent increase in the number of people who expect to spend more next month - from 30 percent to 46 percent - and a surge of 20 points - from 46 percent to 66 percent in consumers who say they anticipate higher spending on everyday household expenses like gas and groceries.

Reduced discretionary spending has been the predominant response for consumers looking to cope with the upward pressure on monthly expenses. In fact, 56 percent report that they intend to spend less next month on discretionary personal expenses like dining out, or going to the movies, up seven points from just six months ago.

But consumers also are taking additional measures to cope with high gas prices. A strong majority (62 percent) are altering their vacation plans this summer. An interesting fact is that 55 percent now say that they are cutting back on everyday living expenses to offset higher gas prices. And while 41 percent of consumers said their first line of defense against high gas prices is to cut back on entertainment spending, 16 percent said they looked to reduce gas and food expenses and 15 percent said they cancelled vacation plans.

"In the last six months, we've watched consumer optimism about the economy decline sharply and at the same time, witnessed a forced rise in spending intentions spurred by high energy and food prices," said Margo Georgiadis, executive vice president and chief marketing officer for Discover Financial Services. "Consumers are working hard to make ends meet, with some even cutting back on groceries or sacrificing a vacation to compensate."

High pump prices for gasoline, which averaged $4.15 a gallon nationwide at the end of June, are especially hitting the lifestyles of lower-income Americans. In fact, 70 percent of the under-$40,000 annual income group reported that gas prices have caused them to cut living expenses. Only 38 percent of the people in the over-$75,000 segment have resorted to such cuts.

Overall, savings and investments was the only area to see a slight increase in the number of consumers expecting to save more.

Majority of Consumers Still Have Money Left Over After Paying Monthly Bills

Since the first of the year, there has been a modest but steady increase - from 48 percent to 51 percent - in the number of people who say they have money left over after paying their monthly bills. But of those who do have money left over, 32 percent now say that the amount they have left is less than the previous month, a Monitor high and 11 points higher than just six months ago.

The rise in the number of consumers having less money left over coincides with an increased amount of consumers expecting an added expense or shortfall of income over the next 30 days. For the fourth straight month this number has risen, reaching a Monitor high of 44 percent in June.

Among people who make less than $40,000 a year, there was some positive news. Nearly 34 percent said they would have money left over after paying monthly bills. This is the highest this number has been since December.

Consumers Show Little Change in Attitude Toward Personal Finances; Economic Confidence at Record Low

Consumers showed little change from previous months toward their personal finances, as nearly 60 percent continue to rate their finances as fair or poor. This number has consistently held near 60 percent over the last six months. However, 54 percent feel their personal finances are getting worse, the same as last month and a Monitor high.

Declining optimism among consumers towards their personal finances has coincided with deteriorating views over the economy. This month's Monitor saw its economic confidence component slide to a record low. Only 15 percent of the country rates the economy as good or excellent - a record low - and 54 percent give the U.S. economy a poor rating - a record high. The comparable numbers for January 2008 were 21 percent and 42 percent respectively.

"Consumers are continuing to feel pressure to spend more on necessities," said Georgiadis. "Despite a majority continuing to have some money left over after paying monthly bills, rising gas and food prices has shaken their confidence in the economy and given them little reason to believe their finances will improve."

For more Discover U.S. Spending Monitor survey data and information, please visit www.discoverfinancial.com/surveys/spending.shtml.

About Discover U.S. Spending Monitor

The Discover(R) U.S. Spending Monitor(SM) is a monthly index of consumer spending intentions and capacity that is based on interviews with a random sample of 15,000 U.S. adults conducted at a rate of 500 per night. In addition to spending, the survey asks consumers their opinions on the U.S. economy and on their personal finances. Weekly reports reflect calculations for the seven previous days of interviews, or a sample of 3,500 adults. Surveys are conducted by Rasmussen Reports, an independent survey research firm (www.rasmussenreports.com).

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. Since its inception in 1986, the company has become one of the largest card issuers in the United States. Its payments businesses consist of the Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation's leading ATM/debit networks; and Diners Club International, a global payments network with acceptance in 185 countries and territories. For more information, visit www.discoverfinancial.com.


    CONTACT: Discover Financial Services
             Matthew Towson
             224-405-5649
             matthewtowson@discover.com

    SOURCE: Discover Financial Services