Drop Leaves Monitor at 76.6; Economic Confidence and Spending Intentions Reach Monitor Lows<
RIVERWOODS, Ill., Jan 07, 2009 (BUSINESS WIRE) -- The Discover U.S. Spending Monitor fell for the fourth consecutive month
in December, declining more than three points to a new low of 76.6
(based out of 100). Both components of the monthly spending index -
consumer confidence in the U.S. economy and consumer spending intent -
reached new lows during the month, as concerns about the economy may be
weighing on post-holiday spending plans.
A record high 65 percent rated the economy as poor, and 70 percent said
things were getting worse. Personal finances did not fare any better as
a record low number of Americans - 35 percent - gave their own finances
a good or excellent rating, and a record high number - 23 percent -
rated them as poor. A majority, 55 percent, said their personal finances
were getting worse in December.
The economic and financial angst consumers are feeling has them
ratcheting down spending plans in January.
Record Number of Consumers Plan on Cutting Back Discretionary Spending
According to the results of surveys conducted for the Monitor during
December, the outlook for spending at the start of the New Year appears
to be a continuation of the belt-tightening consumers have been
practicing over the last few months. Over one-third (34 percent) of
consumers plan to spend less in January. This compares to 22 percent in
November and just 24 percent from a year ago.
"While a post-holiday drop-off in spending intentions is expected, the
10-point gap between this year and last year's numbers may be an
indication of how consumers are feeling about the economy and the
spending plans they are making in light of the crisis," said Julie
Loeger, senior vice president of brand and product management for
Discover Financial Services. "The gap was a bit surprising considering
household expense expectations were much higher a year ago, but economic
sentiment was clearly not as poor as it is now."
Even as a record high 68 percent of consumers say they intend to have
the same or lower expectations for household expenses like gas and
groceries in January, the relief from lower gas prices has not prevented
a record high number of consumers from planning to pull back
discretionary spending in every one of the spending categories tracked
by the Monitor. Nearly 55 percent are trimming discretionary and home
improvement expenses, and 52 percent are holding off on major personal
purchases. All of these numbers were nearly three points higher than
last month. The only discretionary category that saw a planned increase
in spending was savings and investing where 12 percent of consumers
planned on saving more, up 2 points from last month.
Parents with kids at home were among the most aggressive cost-cutting
groups heading into the new year. More than 37 percent of the group
claims that it will spend less in the first month of 2009. That's up 17
points from last month and more than 10 points from December 2007.
Nearly 59 percent of this group intends to cut discretionary spending in
January 2009. That's 4 points higher than both the Monitor's average and
the average for married couples without kids.
Lower Consumer Holiday Spending Intentions Coincide with Retail
Despite the availability of deep discounts, numbers from the Monitor
showed many more consumers planned to shell out less money on holiday
gifts than last year and judging by retail numbers, those plans came to
fruition. Two-thirds (63 percent) of the nation's shoppers planned on
spending less on gifts this season, and only 10 percent said they
expected to spend more. In contrast, the same survey taken last year
showed only 52 percent of consumers planning to spend less, and 19
percent planning to spend more.
Parents with kids at home were also very cost-conscious during the
holiday shopping season. Sixty-six percent of this group, compared to 63
percent of the Monitor's average, planned on spending less this year
than last. Only lower-income Americans were more aggressive cost cutters
over the holiday with 70 percent saying they planned on spending less
than they did during the same period in 2007.
Majority of Consumers Still Have Money Left Over Despite Holiday
In terms of managing their monthly expenses, consumers continue to do a
remarkably good job. Half the country (51 percent) expects to have money
left over after paying their bills for December. That's on par with last
month and 2 points higher than what the Monitor reported a year ago.
In December 2008, 72 percent of the consumers with money left over had
the same or more money left over than the month before, exactly the same
as a year ago. However, there was a 5-point drop in this number from
what was reported in November, most likely due to holiday gift expenses.
Record Low Number of Consumers View the Economy and Personal Finances
as Good or Excellent
Last year at this time, 27 percent of the country rated the economy as
good or excellent and only 35 percent said it was poor. This year, only
7 percent give the economy a good or excellent rating and 65 percent say
it is poor.
Consumer attitudes about their personal finances have a less volatile
deterioration, but are still at record lows. This December, 35 percent
of American adults rate their own financial situation as good or
excellent. That's 4 points off the 39 percent reported a year ago.
"A majority of consumers have responded to the nation's economic crisis
by cutting spending," Loeger said. "While this may not be helpful to the
economy, consumers are keeping their budgets in balance, which may give
them more confidence in the months ahead should the economy turn a
For more Discover U.S. Spending Monitor survey data, charts 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. The Monitor began in
May 2007 with a base index of 100. 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.
SOURCE: Discover Financial Services
Discover Financial Services