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RIVERWOODS, Ill., Jan 07, 2009 (BUSINESS WIRE) -- The Discover U.S. Spending Monitor fell for the fourth consecutive month in December, declining more than three points to a new low of 76.6 (based out of 100). Both components of the monthly spending index - consumer confidence in the U.S. economy and consumer spending intent - reached new lows during the month, as concerns about the economy may be weighing on post-holiday spending plans.

A record high 65 percent rated the economy as poor, and 70 percent said things were getting worse. Personal finances did not fare any better as a record low number of Americans - 35 percent - gave their own finances a good or excellent rating, and a record high number - 23 percent - rated them as poor. A majority, 55 percent, said their personal finances were getting worse in December.

The economic and financial angst consumers are feeling has them ratcheting down spending plans in January.

Record Number of Consumers Plan on Cutting Back Discretionary Spending

According to the results of surveys conducted for the Monitor during December, the outlook for spending at the start of the New Year appears to be a continuation of the belt-tightening consumers have been practicing over the last few months. Over one-third (34 percent) of consumers plan to spend less in January. This compares to 22 percent in November and just 24 percent from a year ago.

"While a post-holiday drop-off in spending intentions is expected, the 10-point gap between this year and last year's numbers may be an indication of how consumers are feeling about the economy and the spending plans they are making in light of the crisis," said Julie Loeger, senior vice president of brand and product management for Discover Financial Services. "The gap was a bit surprising considering household expense expectations were much higher a year ago, but economic sentiment was clearly not as poor as it is now."

Even as a record high 68 percent of consumers say they intend to have the same or lower expectations for household expenses like gas and groceries in January, the relief from lower gas prices has not prevented a record high number of consumers from planning to pull back discretionary spending in every one of the spending categories tracked by the Monitor. Nearly 55 percent are trimming discretionary and home improvement expenses, and 52 percent are holding off on major personal purchases. All of these numbers were nearly three points higher than last month. The only discretionary category that saw a planned increase in spending was savings and investing where 12 percent of consumers planned on saving more, up 2 points from last month.

Parents with kids at home were among the most aggressive cost-cutting groups heading into the new year. More than 37 percent of the group claims that it will spend less in the first month of 2009. That's up 17 points from last month and more than 10 points from December 2007. Nearly 59 percent of this group intends to cut discretionary spending in January 2009. That's 4 points higher than both the Monitor's average and the average for married couples without kids.

Lower Consumer Holiday Spending Intentions Coincide with Retail Results

Despite the availability of deep discounts, numbers from the Monitor showed many more consumers planned to shell out less money on holiday gifts than last year and judging by retail numbers, those plans came to fruition. Two-thirds (63 percent) of the nation's shoppers planned on spending less on gifts this season, and only 10 percent said they expected to spend more. In contrast, the same survey taken last year showed only 52 percent of consumers planning to spend less, and 19 percent planning to spend more.

Parents with kids at home were also very cost-conscious during the holiday shopping season. Sixty-six percent of this group, compared to 63 percent of the Monitor's average, planned on spending less this year than last. Only lower-income Americans were more aggressive cost cutters over the holiday with 70 percent saying they planned on spending less than they did during the same period in 2007.

Majority of Consumers Still Have Money Left Over Despite Holiday Expenses

In terms of managing their monthly expenses, consumers continue to do a remarkably good job. Half the country (51 percent) expects to have money left over after paying their bills for December. That's on par with last month and 2 points higher than what the Monitor reported a year ago.

In December 2008, 72 percent of the consumers with money left over had the same or more money left over than the month before, exactly the same as a year ago. However, there was a 5-point drop in this number from what was reported in November, most likely due to holiday gift expenses.

Record Low Number of Consumers View the Economy and Personal Finances as Good or Excellent

Last year at this time, 27 percent of the country rated the economy as good or excellent and only 35 percent said it was poor. This year, only 7 percent give the economy a good or excellent rating and 65 percent say it is poor.

Consumer attitudes about their personal finances have a less volatile deterioration, but are still at record lows. This December, 35 percent of American adults rate their own financial situation as good or excellent. That's 4 points off the 39 percent reported a year ago.

"A majority of consumers have responded to the nation's economic crisis by cutting spending," Loeger said. "While this may not be helpful to the economy, consumers are keeping their budgets in balance, which may give them more confidence in the months ahead should the economy turn a corner."

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 Monitor(SM) is a monthly index of consumer spending intentions and capacity that is based on interviews with a random sample of 15,000 U.S. adults conducted at a rate of 500 per night. In addition to spending, the survey asks consumers their opinions on the U.S. economy and on their personal finances. Weekly reports reflect calculations for the seven previous days of interviews, or a sample of 3,500 adults. 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 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; PULSE, one of the nation's leading ATM/debit networks; and Diners Club International, a global payments network with acceptance in 185 countries and territories. For more information, visit www.discoverfinancial.com.

SOURCE: Discover Financial Services

Discover Financial Services
Matthew Towson
224-405-5649
[email protected]