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Discover® U.S. Spending MonitorSM Rises for Third Consecutive Month, Up 2 Points in May
Consumer Attitudes about the Economy Continue to Improve, but Spending Intentions Remain Flat

RIVERWOODS, Ill.--(BUSINESS WIRE)--Jun. 3, 2009-- The Discover U.S. Spending Monitor rose for the third consecutive month, up 2 points in May to 86.2 (based out of 100). This is the highest the Monitor’s index has been since September, as the number of consumers saying the economy is getting better rose 5 points to 27 percent, a new Monitor high.

The number of consumers feeling the economy is getting worse reached a Monitor low in May as well. For the first time less than half, 49 percent, of consumers were pessimistic in their economic outlook.

The sharp rise in economic confidence also has consumers feeling better about their personal finances. The number of consumers saying their personal finances are getting better rose to 20 percent, a number not reached since September.

Despite their improved economic and financial attitudes, consumers are reluctant to increase their spending intentions, especially on discretionary purchases. Since January, the spending component of the index has improved less than a point, compared to the index’s economic component, which has jumped 18 points. With gas prices on the rise, consumers are preparing to spend more on household expenses, which judging from the Monitor’s history, may have a negative effect on discretionary spending intentions.

Discretionary Spending Remains Flat, Anticipated Household Expenses on the Rise

The number of consumers expecting to spend more in the month ahead rose to 20 percent. This rise coincided with an increase in the number of consumers expecting to spend more on household expenses like gas and groceries. For May, 30 percent of consumers expected to spend more on household expenses, a 5-point increase from April as gas prices reached their highest levels of the year. However, the 5-point increase is still less than half, 65 percent, of what was reported in May 2008.

With summer approaching, the Monitor also saw a 2-point rise to 16 percent in the number of consumers expecting to spend more on major personal purchases like a vacation.

But anticipated discretionary purchases like dining out and going to the movies remained largely flat, increasing less than a point to 10 percent in May. Nearly half, 49 percent, still plan on cutting back on these expenses. Half are also expecting to spend less on home improvement purchases, the same as last month, and 38 percent of consumers said they’ll be saving and investing less in the month ahead, nearly the same as last month.

“Consumers are feeling the economy is on the mend and their finances are improving, two things needed to revive consumer spending,” said Julie Loeger, senior vice president of brand and product management for Discover Financial Services. “But just when economic conditions appear to be getting better, rising gas prices may give consumers a reason to continue cutting back on their discretionary spending intentions.”

Less Than Half Have Money Left Over

Improving views of the economy and personal finances also hasn’t translated into increased savings month-to-month for a majority of consumers. Only 48 percent expect to have money left over after paying monthly bills, the same as last month and the second consecutive month this number has been below 50 percent. Of those who do have money left over, 78 percent plan on having the same or more money left over than the previous month. This is the first time this number has been below 80 percent since January.

However, for the fifth straight month, less than 40 percent of consumers said they were expecting an added expense or an income shortfall in the next 30 days.

Less Than Half Feel Economic Conditions and Their Finances are Getting Worse; a Monitor First

For the first time in the Monitor’s history less than half of consumers reported that both economic conditions and their finances are getting worse. In May, 49 percent of consumers felt the economy was getting worse, a 2-point improvement from April. Only 48 percent felt their finances were headed in the wrong direction, the same as April.

But current economic and financial conditions are still a drag on consumers. Only 8 percent rate the economy as good or excellent, up a point from April, but down 7 points from a year ago. The one bright spot is only 55 percent currently rate the economy as poor. While still a majority, this number has dropped 9 points since January.

Only 33 percent of consumers rate their finances as good or excellent, down 2 points from April and over 6 points from a year ago. The number rating their finances as poor has hovered between 22-24 percent since December.

“Consumers definitely see brighter days ahead even though currently, things don’t seem that great,” said Loeger. “Hopefully, the worst is over and the improving economic and financial trends the Monitor has shown for the last three months will continue.”

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
Matthew Towson
224-405-5649
matthewtowson@discover.com