Growing Economic Concerns among Women Leads to 3.2 Point Drop in the Discover® U.S. Spending MonitorSMA Cause for Concern for Retailers: Nearly 63% of Consumers Anticipate Spending Less Than Last Year on Holiday Gifts RIVERWOODS, Ill.--(PIN Payments News Blog)--Nov. 2009-- The Discover U.S. Spending Monitor fell 3.2 points in October to 85.8 (based out of 100). The decline was primarily due to a rising number of consumers concerned about the state of the economy. Overall, 56 percent of consumers rated the economy as poor, a 4-point increase from September. Forty-six percent of consumers felt economic conditions were getting worse, a 3-point rise from September and the first increase reported since July.
Concern over personal finances also rose in October, as 27 percent rated their finances as poor, a 4-point increase from September. Forty-nine percent felt their finances were getting worse, a 1-point increase from September.
The decline in economic and financial confidence was greatest among women, which may be a concern for retailers heading into the holiday shopping season. The Monitor has shown that spending intentions are tied to economic and financial confidence, and so far, numbers suggest consumers, especially women, are anticipating cutting as much if not more of their holiday spending as they did last year.
Women Decidedly More Pessimistic Than Men about the Economy, Both Share Similar Views about Finances
In October, 58 percent of women rated the economy as poor, a Monitor record 9-point increase from September. Men rating the economy as poor actually dropped a point to 53 percent. Forty-seven percent of women also said the economy was getting worse, a 3-point increase from September, while 44 percent of men felt the same way, a 2-point increase from the previous month.
Women weren’t able to find comfort in their financial situations either. Twenty-eight percent rated their finances as poor, a 5-point increase from September. However, women who felt their finances were getting worse remained unchanged in October at 49 percent. More men also rated their finances as poor, 25 percent versus 23 percent in September. But more men felt their finances were getting worse, 48 percent versus 45 percent in September.
“The Monitor has always shown that women tend to be less optimistic than men about the economy and their finances,” said Julie Loeger, senior vice president of brand and product management for Discover. “But the record jump in the number of women rating the economy as poor and the pessimism over the current state of their finances may indicate a weak holiday shopping season ahead.”
Nearly Two-thirds of Consumers Anticipate Spending Less on Holiday Gifts
Retailers were hoping a better economy may boost holiday spending this year, but while government reports showed the economy gaining some traction in the third quarter, consumers’ holiday spending intentions may be disappointing to retailers. The Monitor asked nearly 5,000 consumers whether they planned to spend more, less or the same as last year on holiday gifts. Nearly 63 percent said they planned on spending less this year, the same number reported a year ago. Last year was one of the worst holiday shopping seasons on record. Another concern is higher numbers of women (65%) than men (60%) anticipate spending less on holiday gifts this year.
Anticipated spending on household expenses like gas and groceries rose for the first time in four months, not unexpected with the holidays approaching. But with household expenses expected to rise, more consumers plan to cut overall discretionary spending to compensate. Fifty-two percent plan on cutting purchases like going out to movies or restaurants, a 2-point increase from last month. Likewise, there was a 2-point increase to 52 percent of consumers who expect to cut home improvement spending. And 51 percent are planning to cut major personal purchases like vacations in the month ahead, up a point. Even savings wasn’t immune, as 40 percent of consumers plan to save or invest less in November, a 2-point increase.
Monitor-low 44% Expect to Have Money Left Over After Paying Monthly Bills
For the seventh straight month, less than a majority of consumers have money left over after paying monthly bills. In October, a Monitor-low 44 percent planned on having money left over, a 3-point drop from September. Furthermore, 41 percent were expecting an added expense or income shortfall in the month ahead, a 3-point rise from last month and the highest since December 2008.
“The Monitor’s numbers suggest that more and more consumers are having a hard time balancing their budgets,” said Loeger. “Consumers have little choice but to cut discretionary spending to compensate, even if it means less presents for family members this holiday season. Consumers simply don’t seem to have the economic or financial confidence right now to reverse course, which is not good news for retailers.”
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 8,200 U.S. adults conducted at a rate of 275 per night. In addition to spending, the survey asks consumers their opinions on the U.S. economy and their personal finances. 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
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. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company operates the Discover card, America's cash rewards pioneer, and offers student and personal loans, as well as savings products such as certificates of deposit and money market accounts. Its payments businesses consist of 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.
Source: Discover Financial Services
Matthew Towson
Discover
224-405-5649
matthewtowson@discover.com
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