Noted on Zero Hedge, a link to the following from Discover Financial Services (the credit card issuer):
Discover® U.S. Spending MonitorSM Falls for Second Consecutive Month as More Consumers Grow Concerned about the Economy and Their Finances
First Time Since March That a Majority of Consumers Plan to Spend Less on Discretionary, Home Improvement and Major Personal Purchases
RIVERWOODS, Ill.--(BUSINESS WIRE)--Aug. 5, 2009-- The Discover U.S. Spending Monitor fell for the second consecutive month from 85.6 to 83.5 (based out of 100), as consumer attitudes towards the economy and the current state of their personal finances continued to deteriorate. Overall, 61 percent rated current economic conditions as poor, a 2-point increase from the previous month.
The drop in economic confidence also appears to be weighing on consumer attitudes about their personal finances. Only 32 percent currently rate their finances as good or excellent, a Monitor low and a 1-point drop from last month. Twenty-five percent currently rate their finances as poor, tying a Monitor high.
Their growing pessimism toward the economy and their finances has more consumers planning to cut back on spending overall.
Anticipated Spending Falls for First Time Since February; Majority of Consumers Planning Cutbacks on All Discretionary Purchases
The number of consumers expecting to spend more in the month ahead fell to 21 percent in July, a 2-point decrease from June and the first drop since February. The fall coincided with a 6-point decrease in the number of consumers expecting to spend more on household expenses like gas and groceries. For July, only 29 percent of consumers expected to spend more on household expenses. That’s a significant change year-over-year. Last year at this time, when gas prices were reaching record highs, 57 percent of consumers were planning to spend more on household expenses.
Despite gas prices being well below the records set a year ago, the number of people planning to spend less on discretionary spending in the month ahead is similar to what was reported in July 2008. Fifty-three percent are planning to spend less on discretionary purchases like going out to dinner or the movies, 50 percent plan on spending less on home improvement purchases, and half plan on spending less on major personal purchases like a vacation. This is also the first time since March that a majority of consumers are planning cutbacks in all of the discretionary spending categories surveyed.
“Despite some positive signs in the economy, consumers are showing no intentions of increasing their spending,” said Julie Loeger, senior vice president of brand and product management for Discover. “With a Monitor-low 32 percent feeling their personal finances are good or excellent, it is no surprise that consumers are continuing to cut back.”
The cutbacks consumers are making toward discretionary spending aren’t having a positive effect on consumer savings either. Forty-two percent expect to save or invest less in the month ahead, tying a Monitor high, while only 9 percent expect to save or invest more, a Monitor low.
Monitor-Low 47 Percent Expect to Have Money Left Over After Paying Monthly Bills . . .
Majority of Consumers Feel Economy, Personal Finances are Getting Worse
For the first time since February, there was an increase in the number of consumers feeling economic conditions are worsening. Fifty-two percent feel economic conditions are deteriorating. This is the highest this number has been since March.
An increasing number of consumers also are concerned over the direction of their personal finances. Fifty-one percent feel their finances are getting worse, a 2-point increase from June and also the highest this number has been since March.
“The optimism consumers showed about the economy during the spring has faded during the summer,” said Loeger. “Unemployment is still rising and while some are saying the worst is over, the majority of consumers surveyed by the Monitor in July currently don’t feel that way. Until they do, consumers are unlikely to start spending again.”
This report is consistent with Gallup's poll (www.gallup.com) showing that average spending by consumers over the past 14 days (rolling average) is near its lows for this economic cycle.
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