A Cause for Concern for Retailers: Nearly 63% of Consumers
Anticipate Spending Less Than Last Year on Holiday Gifts
RIVERWOODS, Ill.--(BUSINESS WIRE)--Nov. 4, 2009--
The Discover U.S. Spending Monitor fell 3.2 points in October to 85.8
(based out of 100). The decline was primarily due to a rising number of
consumers concerned about the state of the economy. Overall, 56 percent
of consumers rated the economy as poor, a 4-point increase from
September. Forty-six percent of consumers felt economic conditions were
getting worse, a 3-point rise from September and the first increase
reported since July.
Concern over personal finances also rose in October, as 27 percent rated
their finances as poor, a 4-point increase from September. Forty-nine
percent felt their finances were getting worse, a 1-point increase from
The decline in economic and financial confidence was greatest among
women, which may be a concern for retailers heading into the holiday
shopping season. The Monitor has shown that spending intentions are tied
to economic and financial confidence, and so far, numbers suggest
consumers, especially women, are anticipating cutting as much if not
more of their holiday spending as they did last year.
Women Decidedly More Pessimistic Than Men about the Economy, Both
Share Similar Views about Finances
In October, 58 percent of women rated the economy as poor, a Monitor
record 9-point increase from September. Men rating the economy as poor
actually dropped a point to 53 percent. Forty-seven percent of women
also said the economy was getting worse, a 3-point increase from
September, while 44 percent of men felt the same way, a 2-point increase
from the previous month.
Women weren’t able to find comfort in their financial situations either.
Twenty-eight percent rated their finances as poor, a 5-point increase
from September. However, women who felt their finances were getting
worse remained unchanged in October at 49 percent. More men also rated
their finances as poor, 25 percent versus 23 percent in September. But
more men felt their finances were getting worse, 48 percent versus 45
percent in September.
“The Monitor has always shown that women tend to be less optimistic than
men about the economy and their finances,” said Julie Loeger, senior
vice president of brand and product management for Discover. “But the
record jump in the number of women rating the economy as poor and the
pessimism over the current state of their finances may indicate a weak
holiday shopping season ahead.”
Nearly Two-thirds of Consumers Anticipate Spending Less on Holiday
Retailers were hoping a better economy may boost holiday spending this
year, but while government reports showed the economy gaining some
traction in the third quarter, consumers’ holiday spending intentions
may be disappointing to retailers. The Monitor asked nearly 5,000
consumers whether they planned to spend more, less or the same as last
year on holiday gifts. Nearly 63 percent said they planned on spending
less this year, the same number reported a year ago. Last year was one
of the worst holiday shopping seasons on record. Another concern is
higher numbers of women (65%) than men (60%) anticipate spending less on
holiday gifts this year.
Anticipated spending on household expenses like gas and groceries rose
for the first time in four months, not unexpected with the holidays
approaching. But with household expenses expected to rise, more
consumers plan to cut overall discretionary spending to compensate.
Fifty-two percent plan on cutting purchases like going out to movies or
restaurants, a 2-point increase from last month. Likewise, there was a
2-point increase to 52 percent of consumers who expect to cut home
improvement spending. And 51 percent are planning to cut major personal
purchases like vacations in the month ahead, up a point. Even savings
wasn’t immune, as 40 percent of consumers plan to save or invest less in
November, a 2-point increase.
Monitor-low 44% Expect to Have Money Left Over After Paying Monthly
For the seventh straight month, less than a majority of consumers have
money left over after paying monthly bills. In October, a Monitor-low 44
percent planned on having money left over, a 3-point drop from
September. Furthermore, 41 percent were expecting an added expense or
income shortfall in the month ahead, a 3-point rise from last month and
the highest since December 2008.
“The Monitor’s numbers suggest that more and more consumers are having a
hard time balancing their budgets,” said Loeger. “Consumers have little
choice but to cut discretionary spending to compensate, even if it means
less presents for family members this holiday season. Consumers simply
don’t seem to have the economic or financial confidence right now to
reverse course, which is not good news for retailers.”
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