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Discover® U.S. Spending MonitorSM Rebounds in August, Rising 3.5 Points as More Consumers Gain Confidence in the Economy

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 Spending

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 budgets.

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 from July.

“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 2007.

“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).

About Discover

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

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