June 18, 2007

Consumers Confident In Maintaining Current Spending Levels Despite Concerns About The Economy

New Discover® Spending Confidence Monitor Shows Majority of Consumers Have Money Left Over After Paying Monthly Bills

Riverwoods, IL, June 18, 2007 – A new survey by Discover® Card reveals 85 percent of U.S. adults will spend the same or more in June than they did last month despite concerns about the economy. Over 60 percent of consumers rate the economy as fair or poor these days, and 54 percent believe economic conditions will worsen over the next six months.

The Discover Spending Confidence Monitor reveals that consumers' more robust view of their personal finances versus the economy is helping drive their sustained spending. Over the next six months, 45 percent of consumers expect their personal finances to get better versus only 25 percent for economic conditions overall. In addition, most consumers seem fairly confident in managing their budgets with 55 percent expecting to have money left over after paying all of their bills, and the vast majority of these consumers (77 percent) expecting to have the same or more money left over as the previous month.

Polling 500 people daily and 15,000 monthly, the Discover Spending Confidence Monitor was launched as an effort to understand more about consumer spending intentions and financial confidence.

“This survey is intended to provide insights into consumer confidence in spending,” said Margo Georgiadis, Executive Vice President and Chief Marketing Officer for Discover Financial Services. “Part of our company's commitment is providing tools and information that give consumers more control and confidence over their spending and finances. This monthly survey allows us to have our finger on the pulse of spending intentions and to be a trusted source on financial confidence trends.”

Most Consumers Maintaining Current Spending Levels With Confidence

The survey reported that consumers' June spending intentions follow an equal set of claims for May, when 45 percent said they were spending more money, 40 percent were spending the same, and only 13 percent of the nation's consumers said they spent less than in April. Further, consumers expect to continue these spending levels into June with 85 percent planning to spend the same or more.

Consistent income is an important factor in spending confidence for many consumers as half (50 percent) expect no income shortfall or added expenses in June that might cause them to reduce their spending. At the same time, nearly 40 percent of consumers do expect a shortfall in income or added expenses in June, rising to nearly 45 percent for younger adults (under 40) and families with children. Given these concerns, younger adults are the most likely to reduce spending next month, although only 16 percent (versus 13 percent overall) are planning a reduction.

Majority Managing Their Monthly Budgets To Have Money Left Over

“Success in managing their budgets is one of main reasons why many consumers are confident in maintaining their spending. Our survey revealed that 55 percent of consumers had money left over after paying last month's bills,” said Georgiadis. “And they expect this budget surplus to continue with 77 percent of those with a surplus planning to have the same or more money left over after paying June expenses.”

However, there is some caution in current trends as only 15 percent of consumers had more money than in the previous month and 62 percent of total adults had the same. Further, survey results reveal that over one-third (34 percent) of consumers have no money left over after meeting monthly financial obligations. Those without any surplus rises to 40 percent among younger adults and families.

“Currently, younger adults and families are feeling more budget pressure. High gas prices will only make it more difficult for this group of consumers to make ends meet ahead. Not surprisingly, young people are the most likely group to be planning a reduction in spending next month,” Georgiadis said.

Beyond monthly budgeting, another factor bolstering spending confidence is whether consumers are able to support their current lifestyle, even if they are faced with an unexpected loss of income. Overall, 75 percent of consumers could cover at least one month of lost income, with over half of these consumers (40 percent) confident they could cover three or more months. On the other hand, one in four (25 percent) said they could not maintain their current lifestyle for even a month if they lost their income unexpectedly. This share rises to nearly one-third among families and adults under 40.

Consumers More Optimistic About Personal Finances than Economy

In addition to near-term spending intentions, the Discover Card survey asked consumers to rate their personal finances and the U.S. economy. Across the board, the majority of consumers (63 percent) view economic conditions today as poor to fair and most (54 percent) expect economic conditions to worsen over the next six months. Only 1 in 4 (25 percent) thought the economy would improve.

Consumer confidence in their personal finances was more split, with 56 percent viewing their personal finances as poor to fair and 41 percent good to excellent. However, more consumers are optimistic about their finances ahead. Looking out six months, 45 percent of consumers expect their personal finances to be better. Over 50 percent of younger adults (under 40), families, and those with incomes over $60,000 expect their personal finances to get better in the months ahead.

“For the majority of consumers, confidence in their current incomes, future finances, and effective budgeting are encouraging them to sustain or increase current spending levels despite a more pessimistic outlook for the economy as a whole,” said Georgiadis.

About the Discover Spending Confidence Monitor

The Discover Spending Confidence Monitor, to be released once a month, queried 15,000 adult consumers in May of 2007 on 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 (

About Discover Financial Services

Discover Financial Services, a business unit of Morgan Stanley (NYSE: MS), Operates the Discover Card with more than 50 million cardmembers and the Discover Network. Discover Financial Services also operates the PULSE ATM/debit network, which serves over 4,400 financial institutions and includes nearly 260,000 ATMs, as well as POS terminals nationwide. For more information, visit

Contact: Matthew Towson