Despite Economic Crisis, Consumer Attitudes about Their Own Finances Remain Steady, Many Continue to Hold-the-Line on Discretionary Spending Poll: 55 percent of consumers eating out less often to compensate for higher food prices
RIVERWOODS, Ill.--(BUSINESS WIRE)--The Discover U.S. Spending Monitor dipped 2.2 points to 86.5 in
September, as consumers grew increasingly concerned about the U.S.
economy and worked hard to hold-the-line on future spending plans.
More than 55 percent of the nation's adults rated the economy as poor,
and nearly 70 percent think it is getting worse. Both measures were 5
points higher than the previous month and both turned increasingly
negative as the financial crisis played out.
By contrast, despite the barrage of negative news about the state
of financial markets, consumer attitudes about their own finances
remained steady, if not slightly improved. Many took advantage of
lower gas prices to actively manage their discretionary spending and
balance their budgets, giving them sustained confidence in their
personal finances. The number that rated their financial situation as
poor dropped below 20 percent for only the second time this year,
while 30 percent rated their finances as good and 10 percent rated
them as excellent, near the year's high.
Economic Confidence Falls Sharply During the Month
News of the demise of iconic financial services companies coupled
with failed attempts by the federal government to enact a "rescue"
plan, put consumers' economic confidence in a free fall during the
course of the month. The Monitor's nightly surveys of 500 consumers
tracked the decline beginning with the Chapter 11 filing of Lehman
Bros. (September 15). That week, there was a 6-point increase in
"poor" ratings for the economy, from 49 to 55 percent, which turned
into a 13-point increase, to 62 percent, by month's end.
During the same period, there was a 15-point increase in the
number of adults that thought the economy was getting worse. The rise
from 64 percent to 79 percent left the measure at its highest ever
level for the seven days ending October 1, 2008. That night, the U.S.
Senate passed a rescue bill that was subsequently adopted by the U.S.
House and signed by the President on October 3.
"The turmoil in the financial sector has led to a substantial
increase in consumer pessimism over the economy during September
despite the relief lower gas prices have brought to consumers'
budgets," said Margo Georgiadis, executive vice president and chief
marketing officer for Discover Financial Services. "Fifty-five percent
of consumers rate the economy as poor today, double where we were a
Spending Expectations Continue to Moderate
In the meantime, consumer spending expectations moderated during
the month. Like the month before, about two Americans in three (63
percent) were expecting to spend the same or less in the next 30 days.
The return of cheaper fuel - per gallon prices fell to an average
of $3.68 a gallon last month from a high in late July of $4.16 - gave
consumers a much needed breather from rapidly growing living costs.
Once again this month, only 46 percent of consumers were looking ahead
to higher household expenses, including energy, 10 points ahead of
this time last year, but 10 points lower than it was in July when oil
However, a majority (51 percent) are still expecting to spend less
on discretionary personal purchases like eating out or going to the
movies. Forty-eight percent are expecting to spend less on major
personal purchases, up nearly two points from August, and nearly 40
percent expect to save and invest less in the month ahead, also up two
from August. Spending on home improvements showed no change from last
month with 49 percent of consumers expecting to spend less in
"As consumers remain justifiably concerned over the economy, they
continue to hold-the-line on spending, cutting back where they need to
in order to make ends meet," Georgiadis said. "This may be unwelcome
news to our nation's retailers with the holiday season just around the
Food Prices Causing a Majority of Consumers to Eat Out Less Often
According to the U.S. Department of Agriculture, the consumer
price index for food could rise as much as eight percent this year.
The rise, though not as abrupt and disruptive as those associated with
near term energy prices, is a cause for concern among 87 percent of
the country's consumers. In addition, in Monitor interviews with
10,000 consumers this month, 64 percent said they have reduced their
overall spending in response to higher food prices.
To reduce their food expense, Americans told the Monitor that they
are changing their eating out habits. More than half (55 percent) of
the sample said they intend to eat out less often to stave off rising
food costs; and nearly 46 percent said that when they do go out, they
either look for a less expensive restaurant or choose to order less
expensive items from the menu. Since 65 percent of U.S. adults eat
away from home once or more a week, the data implies a difficult time
for the nation's 945,000 restaurateurs, most of whom are small
business owners, and their 13.1 million workers. Throughout the
economic downturn, consumers have been intent on cutting back on such
Balancing Their Budgets Allows Consumers to Sustain Financial
In September, more consumers had money left over after paying
their bills - 52 percent versus 50 percent last month - and just over
three out of four (76 percent) of those with money left over had the
same or more than they did at the end of the previous month. In
addition, the bad news from Wall Street in September did not change
the way Americans judge their reserves. Forty-three (43) percent, the
same as in August, say they have a safety net of one month or less if
they lose their income; 53 percent, also the same as in August, have
more. The number of consumers who claim to have enough to maintain
their lifestyle for six months has slowly, but steadily increased to
25 percent in September, the highest level it has reached in more than
"By actively managing discretionary spending, consumers have
consistently balanced their budgets, which has sustained confidence in
their personal finances," said Georgiadis. "Despite their rising
concern about the economy over the past year, 40 percent of consumers
continue to rate their finances as good or excellent, only two points
below where we were last September."
For more Discover U.S. Spending Monitor survey data, charts and
information, please visit
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
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
Source: Discover Financial Services