First Time Since March That a Majority of Consumers Plan to Spend Less on Discretionary, Home Improvement and Major Personal Purchases
RIVERWOODS, Ill.--(BUSINESS WIRE)--Aug. 5, 2009--
The Discover U.S. Spending Monitor fell for the second consecutive month
from 85.6 to 83.5 (based out of 100), as consumer attitudes towards the
economy and the current state of their personal finances continued to
deteriorate. Overall, 61 percent rated current economic conditions as
poor, a 2-point increase from the previous month.
The drop in economic confidence also appears to be weighing on consumer
attitudes about their personal finances. Only 32 percent currently rate
their finances as good or excellent, a Monitor low and a 1-point drop
from last month. Twenty-five percent currently rate their finances as
poor, tying a Monitor high.
Their growing pessimism toward the economy and their finances has more
consumers planning to cut back on spending overall.
Anticipated Spending Falls for First Time Since February; Majority of
Consumers Planning Cutbacks on All Discretionary Purchases
The number of consumers expecting to spend more in the month ahead fell
to 21 percent in July, a 2-point decrease from June and the first drop
since February. The fall coincided with a 6-point decrease in the number
of consumers expecting to spend more on household expenses like gas and
groceries. For July, only 29 percent of consumers expected to spend more
on household expenses. That’s a significant change year-over-year. Last
year at this time, when gas prices were reaching record highs, 57
percent of consumers were planning to spend more on household expenses.
Despite gas prices being well below the records set a year ago, the
number of people planning to spend less on discretionary spending in the
month ahead is similar to what was reported in July 2008. Fifty-three
percent are planning to spend less on discretionary purchases like going
out to dinner or the movies, 50 percent plan on spending less on home
improvement purchases, and half plan on spending less on major personal
purchases like a vacation. This is also the first time since March that
a majority of consumers are planning cutbacks in all of the
discretionary spending categories surveyed.
“Despite some positive signs in the economy, consumers are showing no
intentions of increasing their spending,” said Julie Loeger, senior vice
president of brand and product management for Discover. “With a
Monitor-low 32 percent feeling their personal finances are good or
excellent, it is no surprise that consumers are continuing to cut back.”
The cutbacks consumers are making toward discretionary spending aren’t
having a positive effect on consumer savings either. Forty-two percent
expect to save or invest less in the month ahead, tying a Monitor high,
while only 9 percent expect to save or invest more, a Monitor low.
Monitor-Low 47 Percent Expect to Have Money Left Over After Paying
For the second straight month, a Monitor-low 47 percent have money left
over after paying monthly bills. This is the fourth straight month this
number has fallen below 50 percent. Of those who do have money left
over, only 10 percent plan on having more money left over, tying a
Monitor low and 2 points lower than June.
On a positive note, for the seventh straight month, less than 40 percent
of consumers say they are expecting an added expense or an income
shortfall in the next 30 days.
Majority of Consumers Feel Economy, Personal Finances are Getting
For the first time since February, there was an increase in the number
of consumers feeling economic conditions are worsening. Fifty-two
percent feel economic conditions are deteriorating. This is the highest
this number has been since March.
An increasing number of consumers also are concerned over the direction
of their personal finances. Fifty-one percent feel their finances are
getting worse, a 2-point increase from June and also the highest this
number has been since March.
“The optimism consumers showed about the economy during the spring has
faded during the summer,” said Loeger. “Unemployment is still rising and
while some are saying the worst is over, the majority of consumers
surveyed by the Monitor in July currently don’t feel that way. Until
they do, consumers are unlikely to start spending again.”
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