Number of Consumers Saying the Economy is Getting Better Nearly Doubles to 15% Although Majority Intend to Continue Cutting Discretionary SpendingRIVERWOODS, Ill., Apr 08, 2009 (BUSINESS WIRE) -- The Discover U.S. Spending Monitor jumped 3.8 points in March to 79.5
(based out of 100) as the number of consumers saying the economy was
getting better nearly doubled from February.
The improvement marks a reversal in consumer attitudes about the state
of the U.S. economy. At the end of February, a record low 8 percent of
the country thought the outlook was brightening. By the end of March, 15
percent of the 15,000 American adults surveyed reported they thought the
economy was improving.
The growing economic optimism among consumers coincided with a sharp
drop in the number who thought things were getting worse. In February,
nearly 70 percent said the economy was in for tougher times ahead
compared to only 61 percent in March. This is the lowest this number has
been since October 2007.
The rise in economic confidence among consumers appeared to have little
effect on their spending intentions, however. And a record low number of
consumers feel their personal finances are in good or excellent
Majority of Consumers Planning to Continue Discretionary Spending Cuts
Consumers are not letting up on their intent to reduce spending. In
March, there were considerably more consumers who said they expect to
spend less, 28 percent, than there were expecting to spend more, 17
percent. This number is the exact opposite from a year ago when 36
percent of consumers expected to spend more while only 16 percent
planned on spending less.
While anticipated discretionary spending edged up slightly in March, a
majority of consumers still intend to spend less on discretionary items,
54 percent, home improvements, 52 percent, and major purchases, 51
percent. Heading into the spring and summer months, consumers are
considerably more cautious than they were last year when only 49 percent
reported in March 2008 their intent to spend less on discretionary items.
"The good news is a few more consumers are feeling the economy has
turned a corner and better days lie ahead," said Julie Loeger, senior
vice president of brand and product management for Discover Financial
Services. "But rising economic confidence has not changed consumers'
spending behavior as a majority of them continue to anticipate cutting
Consumers Focusing on Greater Savings, Debt Reduction
The caution consumers have shown with their spending intentions comes
against a backdrop of continuing angst about debt. In March, nearly 57
percent of consumers said they are somewhat to very concerned about the
debt they are carrying. So, it is hardly surprising that just over one
American in three claims that they will have less debt six months from
today. When asked what they would do with extra money if they had it, 38
percent of consumers said they would pay down either mortgage or credit
card debt and 33 percent said they would save the money. Only 10 percent
said they'd buy something they've been putting off and only 2 percent
said they'd take a vacation with the extra money.
A majority, 51 percent, of consumers are doing their best to have some
extra money left over after paying the monthly bills. This is the first
time this number has been over 50 percent since December and up 2 points
from February. In addition, more than 80 percent said they'd have the
same or more money left in their pockets while there was no change in
the number who said they would have less, 19 percent.
Rise in Economic Optimism, but Concern over Personal Finances Remains
The improved economic outlook from consumers coincided with news of a
plan from the U.S. Treasury Department that will allow banks to package
bad loans and sell them to private investors in the form of marketable
securities. The plan, along with anticipation for the government's
economic stimulus program, ignited a month long rally on Wall Street
that saw the Dow Jones Industrial Average surge nearly 1,400 points. The
Dow's rise seemed to lift the economic spirits of the nation. Not even
bad news about the U.S. auto industry dampened spirits, as confidence in
the economy rose even during the week that GM and Chrysler were pushed
to the edge of bankruptcy. The economic component of the weekly Monitor
rose 2.7 points for the week ending April 1, 2009.
Despite increased economic optimism, concerns from consumers over their
personal finances remain. A third rate their finances as good or
excellent, a Monitor low. By way of comparison, prior to the onset of
the financial crisis in September, 40 percent of the nation's buyers
placed a good or excellent rating on their financial situation. Perhaps
more telling is the fact that a majority of Americans, 52 percent,
continue to believe that their finances are getting worse; and only 16
percent see things getting better, a point higher than February's record
"Consumer spending intentions correlate with their concerns about their
personal finances," said Loeger. "It is unlikely consumers will abandon
the spending caution they've exhibited over the last few months until
confidence in their personal finances improves."
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 MonitorSM 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. Since its inception in 1986, the
company has become one of the largest card issuers in the United States.
The company operates the Discover Card, America's cash rewards pioneer,
and offers student and personal loans, as well as savings products such
as certificates of deposit and money market accounts. 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