Families Show Decline in Economic Confidence, but Discretionary
Spending Intent Slowly Rises
RIVERWOODS, Ill., Apr 07, 2010 (BUSINESS WIRE) --Consumer confidence slipped in March after back-to-back gains the
previous two months, led by married couples with children at home
expressing a significant decline in confidence, according to the
Discover U.S. Spending Monitor for March 2010.
Overall, the Discover U.S. Spending Monitor - a poll of 8,200 consumers
that tracks consumer confidence and spending intentions on a daily basis
- fell 1.5 points in March to 85 (based out of 100). Overall, 49 percent
of consumers felt economic conditions were worsening in March, 3 points
worse than February. The number of consumers who felt their finances
were getting worse also climbed 1.5 points.
The decline in confidence was most prevalent among families. Married
couples with children at home showed a 6-point increase in the number
who felt economic conditions were worsening. They also showed a 3-point
increase in the number who felt their finances were getting worse.
Despite the more pessimistic economic and financial attitudes, the
Monitor reported a positive trend toward discretionary spending intent.
For the second straight month and only the second time since May 2009,
less than 50 percent of consumers plan to cut discretionary spending in
the month ahead. And while a majority of consumers plan to keep spending
the same in the month ahead, the number of consumers planning to
increase discretionary spending has slowly risen since the beginning of
Consumers Indicating Slow Increase in Discretionary Spending, but 57%
Percent Plan to Keep Spending the Same
March saw a Monitor-high 57 percent of consumers planning to keep their
spending flat in the month ahead, tying last month's record. But
consumers are beginning to think about increasing their discretionary
spending. Over the last three months, consumers said they planned to
increase spending in the following categories:
Going out to dinner or the movies (up from 6 to 8 percent planning to
increase their spending)
Making home improvement purchases (up from 12 percent to 14 percent
planning to increase spending)
Spending on vacations or furthering their education (increased from 10
percent to 12 percent planning to increase spending)
Plans to change saving and investing levels stayed flat in March, with 9
percent planning to save and invest more, unchanged from February. And
despite a rise in gasoline prices, only 26 percent of consumers
anticipated spending more on gas, groceries or their mortgages, also
unchanged from last month.
"Since January, consumers have slightly altered their spending
behavior," said Julie Loeger, senior vice president of brand and product
management for Discover Financial Services. "More people are planning to
increase their discretionary spending - or at least keep it the same -
than those who say they plan to spend less. This is the opposite of what
we saw for most of 2009 and the beginning of 2010."
Nearly 40 Percent Expecting an Income Shortfall in the Month
After reaching a Monitor-low 35 percent in February's survey, the
Monitor showed a 4-percent jump in March to 39 percent in the number of
consumers expecting an income shortfall in the month ahead.
Families showed an even bigger jump, as 42 percent of married couples
with children at home said they expected an income shortfall in the
month ahead, a 5-percent increase from last month.
Consumers also had more difficulty balancing their budgets in March than
they did in February. Just 46 percent expected to have money left over
after paying monthly bills, a 2-point decline from February. It has been
a year since the Monitor has showed a majority of consumers having money
left over. However, of those consumers who do have money left over, 81
percent plan on having the same or more money left over than the
previous month, a 2-point increase from February.
57% Rate the Economy as Poor; Just 32% Rate Their Finances Good or
A solid majority of consumers, 57 percent, continue to rate the economy
as poor. This number was unchanged from February. However, families
share a more pessimistic view than the overall population, as 62 percent
of married people with children currently rate the economy as poor, an
increase of 3 points from February.
Just 32 percent of consumers rated their finances as good or excellent,
1-point lower than last month's reading. Families, once again, were more
pessimistic about their finances than the overall population. Only 31
percent rate their finances as good or excellent, down 2 percent from
"Despite consumer spending stabilizing and even showing signs of a
slight increase, consumers are still concerned about the economy and
their own household finances," said Loeger. "With families feeling some
budgetary pressures, the positive trends we have recently seen in terms
of spending may be short-lived."
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(R) 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 direct banking and 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 personal and
student loans, online savings accounts, certificates of deposit and
money market accounts through its Discover
Bank subsidiary. Its payment 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 more than 185 countries and
territories. For more information, visit www.discoverfinancial.com.
SOURCE: Discover Financial Services