Black Friday Holiday Sales Report is Consistent with Monitor’s
Findings: Consumers are Spending Less This Year on Holiday Gifts
RIVERWOODS, Ill.--(BUSINESS WIRE)--Dec. 2, 2009--
The Discover U.S. Spending Monitor was flat in November, rising only a
half point to 86.3 (based out of 100) as a majority of consumers
continued to be pessimistic about the economy and their personal
finances. Overall, 59 percent of consumers rated the economy as poor, a
3-point increase from October. Forty-nine percent of consumers felt
economic conditions were getting worse, a 3-point rise from October and
second consecutive increase.
The number of consumers who rate their finances as fair or poor was
unchanged from October at 66 percent. Forty-nine percent of consumers
felt their finances were getting worse, also unchanged from October.
Upper-income consumers showed the biggest decline in economic
confidence. With spending among upper-income consumers as a key
indicator in determining the success of a holiday shopping season, this
may be a concern to retailers who were hoping this income group could
improve their holiday sales from a year ago. A Black Friday retail sales
report from the National Retail Federation was consistent with what the
Monitor showed during the month of November that consumers at all income
levels had planned to cut back their holiday spending.
Heading Into Black Friday, 65% of Consumers Anticipated Spending Less
on Holiday Gifts
Polling for the November Monitor ended two days before Black Friday and
during that time there was a 2-point rise from 63 percent in late
October to 65 percent in November in the number of consumers planning to
spend less this year on holiday gifts. Upper-income consumers helped
lead this number higher as 57 percent of them planned on cutting back
their holiday spending compared to 55 percent in November 2008.
Unfortunately for retailers, consumers stuck to their plans as the
National Retail Federation reported that more consumers came out to shop
during Black Friday than a year ago, but were spending less money.
“In the midst of the holiday season, consumers of all income levels are
uncertain about the direction of the economy and where it may be
headed,” said Julie Loeger, senior vice president of brand and product
management for Discover. “Unfortunately, this uncertainty has consumers
hard-pressed to help retailers boost their holiday sales.”
Anticipated spending on household expenses like gas and groceries rose
for the second consecutive month from 34 percent to 37 percent as
consumers most likely factored in travel and hosting friends and
families for the holidays. But a majority of consumers will continue to
cut overall discretionary spending to compensate. Fifty-percent plan on
cutting purchases like going out to movies or restaurants. Likewise, 52
percent of consumers expect to cut home improvement spending. And 50
percent are planning to cut major personal purchases like vacations in
the month ahead. Consumers even looked to cut back on their savings with
41 percent saying they planned to save or invest less in December, a
Upper-income consumers were the exception in one spending category.
There was an 8-point increase to 15 percent in the number of
upper-income consumers planning to spend more on discretionary personal
purchases. This number is also 3 points higher than November 2008.
Majority of Upper-Income Consumers Rate the Economy as Poor
For the first time since July, a majority of upper-income consumers
currently rate the economy as poor, 55 percent. This was an 8-point jump
from October and the biggest increase from this income group the Monitor
has reported since September 2008. There was also a 5-point increase to
42 percent in the number of upper-income consumers who felt the economy
was getting worse, the highest number reported since June.
While economic confidence deteriorated, upper-income consumers have
always shown more financial confidence than lower or middle-income
consumers according to the Monitor. That trend continued in November
with nearly 60 percent rating their finances as good or excellent, the
same as October. Middle and lower-income consumers were a lot less
optimistic about their finances with only 34 percent of middle-income
consumers and 16 percent of lower-income consumers rating their finances
as good or excellent.
“November marked the first time in 26 years the unemployment rate
reached double digits and while some economic reports have stated the
economy is getting better, a majority of upper-income consumers tend to
disagree,” said Loeger. “One bit of good news is that a bad economy
doesn’t appear to be affecting their financial confidence.”
More Consumers Expect to Have Money Left Over After Paying Monthly
Another bit of good news came from an increase in the number of
consumers expecting to have money left over after paying monthly bills.
This number increased 4 points from October’s Monitor-low to 48 percent.
While still less than a majority for the eighth straight month, this is
the highest this number has been since May. Furthermore, 40 percent were
expecting an added expense or income shortfall in the month ahead, not
unexpected due to holiday shopping, but still a point lower than
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