Oct. 7, 2009

Discover® U.S. Spending Monitorsm Up 2 Points In September

Confidence in the Economy Reaches Monitor High, But Consumer Spending Intentions Remain Flat

RIVERWOODS, Ill.--(BUSINESS WIRE)--Oct. 7, 2009-- The Discover U.S. Spending Monitor rose for the second straight month, climbing 2 points in September to 89 (based out of 100). The rise in the Monitor’s index is mostly attributed to improved economic sentiment in September. In all, 33 percent of U.S. consumers feel economic conditions are improving, a Monitor high and 2-point increase from August. In September, consumers felt a little better about their personal finances as well. Thirty-three percent rated their finances as good, or excellent, the highest in four months and up a point from August.

Despite a Monitor high in economic sentiment, consumer spending intentions remained flat in September, a cause for concern for retailers who are hoping consumers will increase their spending as we approach the holidays.

More Consumers Expecting to Spend the Same Next Month

Only 19 percent expect to spend more in the next 30 days, continuing a 4-month decline and down a point from August. Fifty-four percent said they planned on spending the same amount, up 2 points.

More consumers are expecting to spend the same next month on discretionary spending as well. Thirty-nine percent of consumers planned on spending the same amount of money on going out to dinner, or the movies in the month ahead, a 21-month high and 2-point increase from August. About 32 percent plan to spend the same on home improvements, a high not reached since February 2008. Thirty-six percent plan on spending the same on major personal purchases over the next 30 days, a 12-month high. Half of consumers are also planning on saving and investing at the same rate over the next 30 days, a 2-point increase from last month.

“After months of cutbacks, consumer spending intentions appear to be leveling off, a sign that they are content with the spending cutbacks they made,” said Julie Loeger, senior vice president of brand and product management for Discover. “A cause for concern is there appears to be no indication consumers are willing to increase their spending, despite a Monitor-high number of them who feel the economy is getting better.”

Compared to a year ago, just 12 percent of consumers felt the economy was getting better, yet 10 percent still expected to spend more on discretionary purchases in the month ahead. Today, only 8 percent are expecting to spend more on discretionary purchases despite 33 percent feeling the economy is getting better.

Six Straight Months where Less than Half of Consumers Have Money Left Over

A discouraging trend continued in September, when for the sixth straight month, less than half of consumers expected to have money left over after paying monthly bills. Only 47 percent expected some extra cash, a point increase from August. However, of those who expect to have money left over, 80 percent said they would have the same or more money left over than the previous month, a high not reached since April.

Furthermore, only 38 percent were expecting an added expense or income shortfall in the next 30 days, a 2-point decrease from August and the lowest since April.

Monitor-Low 43 Percent of Consumers Feel Economic Conditions are Getting Worse

Over half, 52 percent, currently rate the economy as poor, a 13-month low and down 3 points from August. Only 43 percent of consumers feel economic conditions are getting worse, also a Monitor low and 3 points lower than last month.

While consumers showed improved economic sentiment, they were not as optimistic about their financial outlook. Thirty-three percent currently rate their finances as good or excellent, a 1-point increase from last month. But there was an increase of a point to 48 percent who feel their finances are getting worse.

“Consumers definitely feel economic conditions are getting better, but over half still rate current economic conditions as poor,” said Loeger. “Combine that with uncertainty as to where their personal finances are headed and you can see why consumers are still very cautious with their spending intentions. Unfortunately, the Monitor is showing no signs that consumer attitudes may change as we head into the holiday shopping season.”

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 leading credit card issuer and electronic 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 student and personal loans, as well as savings products such as certificates of deposit and money market accounts. Its payments 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 185 countries and territories. For more information, visit www.discoverfinancial.com.

Source: Discover Financial Services

Matthew Towson

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