First Time Since March That a Majority of Consumers Plan to Spend
Less on Discretionary, Home Improvement and Major Personal Purchases
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.
