Increasing Concern over the Economy Has Consumers Planning to Hold the Line or Cut Discretionary Spending in the Month Ahead
RIVERWOODS, Ill.--(BUSINESS WIRE)--Jul. 8, 2009--
The Discover U.S. Spending Monitor fell for the first time in four
months from 86.2 to 85.6 (based out of 100), as consumer attitudes
toward the economy reversed course from the previous three months with
more consumers expressing concern over the current state of the U.S.
economy. Overall, 59 percent rated current economic conditions as poor,
a 4-point increase from the previous month and the first increase since
While consumers are clearly concerned over current economic conditions,
the number feeling the economy is getting worse remained at a
Monitor-low 49 percent in June.
The drop in economic confidence also appeared to have little effect on
consumer attitudes toward personal finances. Thirty-three percent
currently rate their finances as good or excellent, the same number
reported last month.
But the reversal in consumer attitudes toward the economy appears to be
affecting discretionary spending intentions. Higher gas prices, along
with uncertainty as to whether the economic recession has bottomed out
has consumers either holding the line or cutting their discretionary
spending intentions in the month ahead.
Anticipated Household Expenses Rise for the Fourth Straight Month,
Majority of Consumers Planning to Spend Less on Discretionary Purchases
The number of consumers expecting to spend more in the month ahead rose
to 23 percent in June. This is the highest this number has been since
November 2008. The rise coincided for the second straight month with an
increase in the number of consumers expecting to spend more on household
expenses like gas and groceries. For June, 35 percent of consumers
expected to spend more on household expenses, a 5-point increase from
May and a 10-point increase in the last two months. June saw the highest
gas prices of the year nationwide.
To adjust for an increase in household expenses, consumers planned
cutbacks on discretionary purchases like going out to dinner or the
movies. Over half, 51 percent, plan to spend less in the month ahead on
discretionary purchases, a 2-point increase from the previous month.
Half of consumers are also expecting to spend less on home improvement
purchases, the same as last month, and 48 percent of consumers said
they’ll be spending less on major personal purchases like a vacation,
also the same as last month. Even consumer savings wasn’t immune to
possible cutbacks, as 40 percent of consumers planned on saving and
investing less in the month ahead, a 2-point increase from the previous
“The optimism we were seeing from consumers in terms of the economy over
the past few months may have hit a roadblock in June,” said Julie
Loeger, senior vice president of brand and product management for
Discover Financial Services. “With unemployment still rising and
uncertainty as to whether the economic recession is ending, consumers
are seeing no reason to change the spending restraint they’ve exhibited
over the last several months.”
Less Than Half Have Money Left Over
For the third straight month, less than half of consumers, 47 percent,
have money left over after paying the monthly bills, 1-point lower than
the previous month. Of those who do have money left over, 79 percent
plan on having the same or more money left over than the previous month,
a 1-point increase from the previous month.
A constant bright spot for the Monitor has been the fact that over the
last six months less than 40 percent of consumers say they are expecting
an added expense or an income shortfall in the next 30 days. This trend
continued in June with 39 percent saying they were expecting an added
expense or income shortfall.
Current Economic and Financial Conditions Still Dragging on Consumers
Current economic and financial conditions are still a big concern for a
majority of consumers. Fifty-nine percent currently rate the economy as
poor and only 8 percent of consumers feel economic conditions are good
or excellent. Compared to a year ago when gas prices were touching $4
per gallon, 15 percent of consumers still felt the economy was good or
excellent while 54 percent felt it was poor.
While the number of consumers rating their finances as good or excellent
remained unchanged at 33 percent in June, this number is 5 points lower
than a year ago. Forty-nine percent feel their finances are getting
worse, also unchanged from the previous month.
“Unemployment is the highest it’s been in 26 years and higher gas prices
have forced consumers to keep a tight budget. It is no wonder consumers
are concerned about the economy and their finances,” Loeger said. “But
for the second straight month, less than half feel economic conditions
are getting worse, a sign that consumers are hopeful the worst of this
economic recession has passed.”
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