DOW JONES NEWSWIRES
Middle-income consumers shrugged off pessimism about the economy
and their own finances to spend more than expected during the
holiday season, according to a report from Discover Financial
Services (DFS).
But the firm's U.S. Spending Monitor, which measures future
spending intentions, fell 3.3 points to a nine-month low of 83 in
December, reflecting the typical post-Christmas hangover and
continued skepticism about an economic recovery.
Doubts about the economy are still in consumers' minds, with the
percentage rating the economy as poor improving only two points to
57%. The ranks of those saying the economy is getting worse fell
just one point to 48%.
The respondents were even less bullish on their own finances, as
the number of consumers rating their own finances as poor rose a
point to 26%. Half think their finances are getting worse. A record
low 43% also said they have money left over after paying monthly
bills.
Despite all those worries, consumers making $40,000 to $75,000
were particularly surprising in their spending on gifts. Eighteen
percent spent more on gifts this year than last, triple the
percentage that had said before Christmas they would.
Of people making $75,000 or more, 22% spent more on gifts, nine
points better than expected. Those on the low end--under $40,000 in
income--were the only to fall short of expectations, with 11% of
consumers spending more on gifts, one point less than
anticipated.
"Concern over the economy and personal finances did not appear
to dampen consumers' holiday spirit," said Julie Loeger, senior
vice president of brand and product management for Discover. "They
gave retailers a much needed boost in December, which hopefully
will make January a little easier to bear, since consumers usually
reduce their spending after the holidays."
-By Jay Miller, Dow Jones Newswires; 212-416-2355;
jay.miller@dowjones.com