Aug. 7, 2007

Consumer Spending Confidence Rebounds In July

Expressed as Numeric Index for First Time,
Spending Confidence Monitor Rises to 97.2

Discover Survey of U.S. Consumers Reveals Strong Summer
Optimism Among 18 to 29-Year-Olds

RIVERWOODS, Ill.--(BUSINESS WIRE)--Aug. 7, 2007--Consumer spending confidence rebounded slightly in July, according to a random survey of 15,000 US adults conducted last month for the Discover(R) Consumer Spending Confidence Monitor(SM). For the first time since the Monitor started in May, more than 50 percent of consumers are not expecting income shortfalls this month. A modest rebound in the number of consumers saying they had money left over after paying July's bills and a general increase in economic optimism helped drive a 0.5 point increase in the July Monitor to 97.2 from 96.7 in June.

July marks the first time that the Discover Consumer Spending Confidence Monitor of 15,000 adults has been expressed as a numeric value or index. The Monitor is based upon consumer responses to nine questions on spending intent, capacity and economic confidence. The responses are scaled and averaged using conventional indexing methodology. The index baseline of 100 was established using data from the inaugural Monitor survey in May 2007.

Consumers' views of their personal finances edged up slightly in July as 31 percent said their personal finances were improving versus 30 percent in June. Likewise, 27 percent of the adults surveyed in July said the economy was poor compared to 28 percent in June.

Consumers Maintaining Their Spending with Confidence, Not Likely to Increase Their Spending

The number of consumers who said they would spend the same next month went up to 51 percent in July compared to 49 percent in June. In addition, in July one consumer in three (33 percent) said they would spend more next month, virtually the same as last month.

"The data suggests that consumers are doing a good job of managing their budgets," said Ed Stolbof, senior vice president of marketing for Discover Financial Services.

"Half (50 percent) of consumers said they had money left over after paying the bills. Successfully managing their budgets to have money left over may be a reason behind consumers' confidence in maintaining their spending. But concerns about the economy, (63 percent view the economy as fair or poor) may keep them from increasing their spending next month."

The July data also showed no appreciable change in the number of people who say they are vulnerable to sudden losses of income. Twenty-nine percent say they could not maintain their lifestyle for more than 30 days before replacing lost income.

Younger Adults Increasingly Managing Their Budgets to Have Money Left Over, Less are Vulnerable to Sudden Income Loss

The survey revealed that 50 percent of consumers had money left over after paying last month's bills, up from 49 percent in June. Consumers expect this budget surplus to continue with 79 percent of those with a surplus planning to have the same or more money left over after paying July expenses.

The July data shows marked changes in scores for 18 to 29-year-olds when it comes to spending. There was a 6 percent increase to 45 percent in the number of younger consumers who said they would have money left over after paying their monthly bills and a 4 percent decline to 44 percent who claim they will have no money left over. The 18 to 29-year-olds saying they expected added expenses or shortfalls in income fell from 48 percent to 44 percent; and the number expecting no shortfalls rose from 38 percent to 44 percent.

"The summer season has brought an increase in optimism among consumers 18 to 29 years old," said Stolbof. "Our survey shows an increasing amount of younger adults having money left over after paying their bills and that is boosting their spending confidence."

The biggest change in the segment's opinions came in connection with their attitudes about continuing their lifestyles in the event of a sudden loss of income. In June, 45 percent said they couldn't go for more than a month without replenishing their source of income. That percentage dropped seven points in July to 38 percent.

Confidence in the Economy, Personal Finances Increases Among Younger Adults

While the overall view of the economy remained the same as last month's survey with 35 percent rating it as good or excellent, younger adults (18-29) showed less pessimism about the economy as 67 percent rated the economy fair or poor compared to 71 percent in June. Twenty-nine percent of younger adults feel the economy is good or excellent versus only 27 percent in June.

There also were improvements among younger adults in attitudes about their personal finances as those who said their finances were improving jumped four points to 35 percent. This is well above the overall average of 31 percent. Younger adults who said their personal finances were getting worse fell three points to 41 percent, the same as the overall average.

About the Discover Consumer Spending Confidence Monitor

The Discover Consumer Spending Confidence Monitor, released monthly, queried nearly 15,000 adult consumers in July 2007 about spending intentions and capacity. The survey also asked for opinions on the U.S. economy and ratings of personal finances. The survey was conducted by Rasmussen Reports, LLC, an independent survey research firm ( It has a margin of error of +/- 1 percent.

About Discover Financial Services:

Discover Financial Services (NYSE: DFS) operates the Discover Card with more than 50 million cardmembers, the Discover Network with millions of merchant and cash access locations, and the Goldfish credit card business in the United Kingdom. Discover Financial Services also operates the PULSE ATM/debit network, which serves more than 4,400 financial institutions and includes nearly 260,000 ATMs, as well as POS terminals, nationwide. For more information, visit

CONTACT: Discover Financial Services
Matthew Towson

SOURCE: Discover Financial Services

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