Discover(R) U.S. Spending Monitor(SM) Flat in February
05 Marzo 2008 - 12:00PM
Business Wire
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.
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