DFS Discover Financial Services

The Discover U.S. Spending Monitor reached an all-time low in February, falling more than two points to 75.7 (based out of 100). The decline reflects record-low readings for the Monitor�s two main components: economic confidence and spending intentions. More than 67 percent of the 13,000 adults surveyed in February gave the economy a poor rating and for the ninth consecutive month consumers lowered their spending intentions.

In addition, consumers seem to be socking more money away to cope with an uncertain economy. February marked the third time in as many months that there was an increase in the number of consumers who intend to save the same or more than they did the previous month.

Consumers Planning to Cut Expenses Across the Board

A Monitor-high 82 percent of consumers in February said they intend to spend the same or less next month, and 77 percent said they actually managed to do just that the month before.

Jolted into expense reductions by high energy prices last spring and summer, a majority of Americans continue to keep a tight rein on their wallets. This month, though gas prices remained unusually low at less than $1.70 a gallon, the highest number of consumers ever, 74 percent, said they expect to be spending the same or less on household items next month.

In addition, 91 percent of consumers say they will spend the same or less next month on discretionary items like entertainment. Likewise, more than 85 percent of the nation�s shoppers intend to either hold the line or reduce their spending in March for home improvements and major personal items.

�Until consumers can see some light at the end of the tunnel concerning the economy, I don�t expect their spending intentions to change much,� said Julie Loeger, senior vice president of brand and product management for Discover Financial Services. �The economy is giving them an incentive to save right now which unfortunately is coming at the expense of the nation�s retailers.�

The Monitor reported for the second month in a row that 57 percent of consumers plan to continue to save and invest the same or more in the next month. This is the highest this number has been since October.

Record 81 Percent Have the Same or More Money Left Over Than Previous Month

While many of the Monitor�s readings reached record lows in February, there were some underlying bright spots. For the second consecutive month, only 37 percent expected an added expense or income shortfall in the next 30 days. This is the lowest this number has been in a year. Furthermore, while less than a majority (49 percent) of consumers said they planned on having money left over after paying bills in February, of those who did have money left over, a record 81 percent said they expected to have the same or more money left over than the previous month. This was the first time this number broke 80 percent since September 2007 and the third straight month this number has increased.

However, the increase in money left over has not resulted in a buildup in reserves from consumers should they suddenly lose their income. Over 43 percent said they can only last a month or less maintaining their current lifestyle if they suddenly lost their income. Only 21 percent said they had enough reserves to last six months or more. This is the lowest this number has been in nearly a year.

Economic Confidence Hits Monitor Low

The economic confidence component of the Monitor dropped to a new low in February and now measures a full 10 points lower than it did in September. Only 6 percent of the consumers surveyed give the U.S. economy a good or excellent rating and only eight percent think things are getting better, both new lows.

Meanwhile, even though the government enacted a $789 billion stimulus package in February, the move could not sway the relative economic pessimism of consumers, 69 percent of whom continue to think that the economy is getting worse.

The economic stimulus package did little to change consumers� opinion about their personal finances either. Just 34 percent rate their personal finances as good or excellent, a record low and 6 points below what consumers reported last September.

�Any hope of a consumer-driven economic recovery will depend on the confidence consumers have in their own personal finances,� said Loeger. �And right now, despite the increase in savings many consumers are reporting over the last three months, that confidence just isn�t there.�

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 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.

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