13-Month Low in Number of Consumers Planning Discretionary Spending Cutbacks
RIVERWOODS, Ill.--(BUSINESS WIRE)--May. 6, 2009--
The Discover U.S. Spending Monitor jumped a record 4.7 points in April
to 84.2 (based out of 100), as the number of consumers saying the
economy was getting better rose 8 points to 23 percent. In three months
this number went from a Monitor low 8 percent in February to a Monitor
high in April.
The growing economic optimism among consumers coincided with a sharp
drop in the number who thought things were getting worse. In April, a
Monitor low 51 percent said the economy was getting worse, 10 points
lower than March and 7 points lower than the previous low, 58 percent,
set back in July 2007.
The sharp rise in economic confidence appears to be positively affecting
consumers’ attitudes about their personal finances. For the first time
since September, the number of consumers rating their finances as good
or excellent increased to 35 percent. Increasing optimism about the
economy and personal finances may be a reason consumers eased up on
their spending restraint in April after hunkering down for the last
Half of Consumers Planning to Spend Less on Discretionary Purchases,
a 13-Month Low
In April, 50 percent of consumers planned on cutting back their
discretionary spending. While still significant, this is the lowest this
number has been since March 2008. Consumers are also showing a little
less spending restraint in other areas as well. Fifty percent of
consumers are planning to spend less on home improvement purchases, down
2 points from March, and 48 percent are planning to spend less on major
personal purchases like a vacation, down 3 points from March and the
first time this number has been below 50 percent since September.
“It’s quite remarkable that economic confidence, as measured by the
Monitor, went from a low in February to a high in April. There are signs
that their optimism may be influencing consumer spending intentions,”
said Julie Loeger, senior vice president of brand and product management
for Discover Financial Services. “But two months is hardly a trend, and
we’ll have to wait and see if their optimism lasts.”
While the number of consumers saying they are planning to spend less in
the month ahead went down by 4 points, only 20 percent of consumers say
they plan to spend more. This number is 20 points lower than April 2008,
when 40 percent expressed similar views.
Less Than Half Have Money Left Over
While economic confidence is on the upswing, the number of consumers
saying they have money left over after paying monthly bills fell from 51
percent to 48 percent in April. However, of those consumers who had
money left over, 80 percent were expecting to have the same or more
money left over, the same as March.
For the fourth straight month, less than 40 percent of consumers said
they were expecting an added expense or an income shortfall in the next
Economic Optimism Gives Consumers Greater Confidence in Their
Better views about what lies ahead economically may have given consumers
a dose of optimism about their personal finances in April. Nearly 50
percent feel their finances are the same or getting better, a number not
reached since February 2008. Not as many consumers believe their
finances are getting worse, 48 percent, the first time this number has
been under 50 percent since February 2008 and 4 points lower than March.
Consumers also feel that current economic conditions are better than
what they were a month ago. While 59 percent of consumers still rate the
economy as poor, this number is 6 points lower than March and the first
time it has fallen below 60 percent since October.
“Consumers continue to approach their spending with caution, albeit a
little less so in April,” said Loeger. “As they grow more confident in
the economy and their finances, consumers may boost their spending;
which should help with an economic recovery.”
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® U.S. Spending MonitorSM is a monthly
index of consumer spending intentions and capacity that is based on
interviews with a random sample of 8,200 U.S. adults conducted at a rate
of 275 per night. In addition to spending, the survey asks consumers
their opinions on the U.S. economy and their personal finances. 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