Consumer spending plans continue to be cautious, as concern over
the economy and personal finances remain high
RIVERWOODS, Ill.--(BUSINESS WIRE)--March 5, 2008--The Discover
U.S. Spending Monitor steadied in February as spending intentions
flattened, while pessimism about the economy increased. After sharp
spending cutbacks in December and then January, following the end of
the holiday season, consumers steadied their spending, but were
cautious about any increases. Even lower expected pressures on
household expenses and the announced economic stimulus package did not
encourage a rebound. Record pessimism about the economy and personal
finances seems to be constraining consumers' willingness to spend
more. The Monitor was essentially unchanged in February, up just .3 to
86.4.
Household expense pressures ease, but consumers continue to hold
the line on spending
Spending intentions virtually mirrored January's numbers and
continued to reflect a caution among consumers to hold the line on
spending. While there was a 2-point decrease in the number of
consumers who said they were spending less than last month, this did
not translate into an expected increase in spending in the month
ahead. This number remained at 29 percent.
The hesitancy among consumers persisted even as those expecting to
spend more on household expenses dropped six points to 40 percent, a
number not seen since last October. Consumers still appear to be
spending with caution when it comes to discretionary expenses. There
was no significant increase in those willing to spend more and over 43
percent still plan to spend less in each of the categories surveyed:
discretionary personal expenses like eating out or going to the
movies, household improvements like remodeling or decorating, and
major personal purchases like a health club membership or vacation.
"Consumers continue to approach their spending with caution," said
Margo Georgiadis, executive vice-president and chief marketing officer
for Discover Financial Services. "The drop in household expense
expectations has done little to change consumer minds when it comes to
discretionary spending. Given recent economic news of record oil
prices and a 26-year high in food and energy prices, there seems to be
no relief in sight for any increase in consumer spending beyond the
essentials."
Cautious spending continues even among high-income earners. As
reported in January, consumers making $75,000 or more continue to show
a change in their spending intentions, as a Monitor low 30 percent
plan to spend more this month. This appears largely driven by an
8-point drop of those expecting to spend more on household expenses.
But it did not correlate with higher discretionary spending
intentions, as those expecting to spend more on personal entertainment
and major personal purchases dropped by a point each hitting new lows
for the $75,000+ income group.
Budgets Remain Tight: Less than a majority have money left over
after paying monthly bills
Cutting back discretionary spending did not appear to help
consumers' budgets in February, as only 48 percent said they would
have money left over after paying the monthly bills. This is the third
consecutive month this number has fallen below 50 percent and may
correlate with continued household expense pressures.
But of those who said they would have money left over, 79 percent
said it would be the same or more as last month. And despite continued
concerns over their personal finances, only 37 percent of consumers
said that they expected shortfalls in income or added expenses in the
month ahead. That's nearly two points better than January.
Consumers remain very concerned about the economy and their
finances
Less than 19 percent of consumers rate the economy as good or
excellent these days, a new Monitor low and a sharp drop from 32.5
percent in October. Outlook ahead also hit a new low with 70 percent
expecting economic conditions to worsen.
The economic stimulus package announced in February led to a brief
increase in the Monitor's index, but was only temporary as the Index
moved lower towards the end of the month.
Those making $75,000 or more do not appear hopeful for an economic
turnaround either, with those seeing it as good or excellent dropping
again (27 percent) and those feeling the economy is getting better
dipping from 17 to 14 percent. This is in sharp contrast to the 32
percent of upper income earners who felt the economy was getting
better last July.
Women also continue to be much more pessimistic about the economy.
Only eight percent of women think the economy is getting better
compared to nearly 14 percent of men; and 75 percent of women say the
U.S. economy is getting worse while 65 percent of men share that
opinion.
Tight budgets and a negative view on the economy also continue to
dampen consumer views of their personal finances. A Monitor high 48.5
percent view their personal finances as getting worse ahead. Upper
income consumers strayed from their counterparts, as 40 percent felt
their personal finances were getting better, down over two points from
January. All other incomes below $75,000 nudged up a point.
"Consumers are concerned about their finances and even more
concerned about the economy," said Georgiadis. "They may need a steady
stream of good economic news to alleviate the caution they've
displayed towards their spending."
For more Discover U.S. Spending Monitor survey data and
information, please visit
www.discoverfinancial.com/surveys/spending.shtml.
About the Discover U.S. Spending Monitor
The Discover U.S. Spending Monitor released monthly, queried
nearly 15,000 adult consumers in February 2008 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 (www.rasmussenreports.com). It has a margin of error of +/- 1
percent.
About Discover Financial Services
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. The company operates the
Discover Card, America's cash rewards pioneer. Since its inception in
1986, the company has become one of the largest card issuers in the
United States. Its payments businesses consist of the Discover
Network, with millions of merchant and cash access locations, and
PULSE, one of the nation's leading ATM/debit networks. Discover also
operates the Goldfish credit card business in the United Kingdom. For
more information, visit www.discoverfinancial.com.
CONTACT: Discover Financial Services
Matthew Towson
224-405-5649
SOURCE: Discover Financial Services