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
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
“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