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Discover® U.S. Spending MonitorSM Consumer Confidence Falls a Point in February

Economic Confidence Falls as Gas Prices Rise, but Consumer Spending Intentions Show Modest Gains

RIVERWOODS, Ill., Mar 02, 2011 (BUSINESS WIRE) -- Consumer confidence declined slightly in February, as dampening consumer views about the state of the U.S. economy correlated with rising gas prices sparked by Middle East tensions, according to the Discover U.S. Spending Monitor.

The Monitor, a poll of 8,200 consumers tracking economic confidence and spending intentions on a daily basis, fell 1 point to 92.1 after two consecutive monthly gains. Overall, just 9 percent of consumers rate the economy as good or excellent, falling 1 point from January and back into single digits. More than half of consumers, 54 percent, still rate the economy as poor, up 3 points from January. Thirty-six percent of consumers rate the economy as fair, a 1-point decline from last month.

Optimism about where the economy is heading also fell in February. Thirty-one percent of U.S. consumers feel economic conditions are getting better, 2 points lower than January. Forty-four percent of consumers feel economic conditions are getting worse, 4 points higher than last month's Monitor-low of 40 percent.

Consumers' Discretionary Spending Intentions Show Modest Gains Despite Rising Gas Prices

Despite the decline in economic confidence, consumers' discretionary spending intentions rose in February.

Overall, 25 percent of consumers expect to spend more in the month ahead, a 2-point rise from January. As well, more consumers are planning to increase their discretionary spending in the following areas:

  • 49 percent of consumers are expecting to spend the same or more in the next month on going out to dinner, movies or sporting events, up 3 points from last month
  • 49 percent of consumers plan to spend the same or more next month on home improvement purchases, up 3 points from January and the highest number since April 2010
  • 52 percent expect to spend the same or more on a vacation or health club membership, up 2 points from last month

But rising gas prices may make any increase in discretionary spending intentions short-lived. Forty-one percent of consumers expected to spend more in the next month on gas, groceries or their mortgage. While down a point from last month, this is the highest February number the Monitor has reported since 2008.

"While the Monitor's index still stands at its highest level since late 2007, rising gas prices are already affecting consumers' economic confidence," said Julie Loeger, senior vice president of brand and product management for Discover. "Nothing hurts economic confidence and consumer spending intentions more than high gas prices, as the Monitor proved three years ago when gas prices reached record highs."

35% of Consumers View Their Finances Favorably, 48% are Balancing Their Budgets

While rising gas prices correlated to declining consumer views of the economy, for the moment, they are having little effect on consumers' financial confidence. Thirty-five percent rated their finances as good or excellent, just 1-point lower than last month. There was only a 1-point increase to 45 percent in the number of consumers feeling their finances are getting worse.

More consumers balanced their budgets in February as well. Forty-eight percent of consumers expected to have money left over after paying monthly bills, a 1-point increase from January, however this was the 23rd consecutive month this number has been below 50 percent.

Just 36 percent of consumers anticipate having an added expense or an income shortfall in the month ahead, 1-point higher than January. 51 percent were expecting no added expense or income shortfall, also 1-point higher than last month.

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 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

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