Despite Improved Economic and Financial Confidence, Consumers
Continue to Hold the Line on Spending
RIVERWOODS, Ill.--(BUSINESS WIRE)--Sep. 2, 2009--
The Discover U.S. Spending Monitor rebounded in August, rising 3.5
points to 87.0 (based out of 100) as more consumers gained confidence in
the economy and their personal finances. In all, 31 percent of U.S.
consumers felt economic conditions were improving, a Monitor high and a
7-point increase from July. The rise in confidence also correlated with
a 3-point increase in the percentage of consumers who felt their
personal finances were getting better. Just over 21 percent felt their
finances were improving, the highest number reported since August 2008.
The rise in economic and financial confidence may be a sign that
consumers expect better times ahead, but that doesn’t mean they plan to
resume spending. Consumers plan to continue holding the line on
discretionary spending heading into September.
Majority of Consumers Continue to Anticipate Cutting Discretionary
For the third straight month, over 50 percent of consumers plan on
cutting discretionary personal spending in the month ahead. In August,
52 percent planned on spending less on going out to dinner, movies, or
sporting events. Other than May 2009, this number has stayed at or above
50 percent for the last 18 months.
Despite the recent improvements in the housing market, more consumers,
53 percent, plan on cutting home improvement expenses in the month
ahead, a 3-point increase from July. Nearly half, 48 percent, are also
planning to cut major personal purchases, like vacations, out of their
More Consumers Increase Savings
While discretionary spending plans are down, consumers reported an
increase in plans to save and invest. Fifty-eight percent plan on saving
and investing the same or more in the month ahead, a 3-point increase
“There was definitely a positive turnaround in consumer attitudes toward
the economy and their personal finances in August,” said Julie Loeger,
senior vice president of brand and product development for Discover.
“The rise in the stock market and stable gas prices may have given
consumers a reason to believe things are improving and the ability to
save and invest more. But improved economic and financial attitudes have
not translated into increased consumer spending, a cause for concern for
retailers counting on revenue from back-to-school shopping and as the
holiday season approaches.”
Monitor-Low 46 Percent Have Money Left Over After Paying Monthly Bills
Improved economic and financial confidence did not lead to more
consumers having money left over after paying the monthly bills. Only 46
percent reported money left over in August, a Monitor-low and 5 points
lower than a year ago. Furthermore, of those who did have money left
over, 22 percent reported having less money left over than the previous
month, a 3-point rise from July and the highest this number has been
since December 2008.
An eight-month trend of less than 40 percent of consumers expecting an
added expense or income shortfall in the month ahead was also broken in
August. Exactly 40 percent said they were expecting one or the other, up
a point from July.
Number of Consumers Feeling Economic Conditions are Getting Worse
Falls to Monitor Low
Only 46 percent of consumers feel economic conditions are getting worse,
a Monitor low and 6 points less than July. In August 2008, 65 percent of
consumers felt economic conditions were deteriorating.
An improved economic outlook also correlates with less consumers feeling
their finances are getting worse. In August, 46 percent of consumers
felt their finances were headed in the wrong direction, a 5-point
improvement from July and the lowest this number has been since December
“Many economists have reported that for the economy to recover,
consumers will need to start spending again,” said Loeger. “The Monitor
continues to show consumers reluctant to increase their spending. But
the optimistic economic and financial attitudes consumers displayed in
August will hopefully lead to optimistic spending intentions from
consumers in the months to come.”
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).
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 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