Consumers ages 18-39 Sour on the Economy, Finances; Discretionary Spending Intentions Decline for First Time in Four Months
RIVERWOODS, Ill.--(BUSINESS WIRE)--Consumer confidence declined in May as 18- to 39-year-olds who showed a surge in confidence in April soured on the economy and their finances in May, according to the Discover U.S. Spending Monitor.
“The optimism consumers between the ages of 18-39 showed the past couple months reversed course in May”
The Monitor – a poll of 8,200 consumers that tracks consumer confidence and spending intentions on a daily basis – declined 1.1 points in April to 90.4 (based out of 100), after two consecutive monthly gains. Overall, 31 percent believe economic conditions are improving, a 3-point decline from last month’s record high.
Confidence Declines Among 18-to 39-Year-Olds
Fifty-two percent of younger consumers rated the economy as poor, an increase of 7 points from the previous month. By comparison, older consumers who rated the economy as poor increased only three points. Other indicators:
- The number of consumers ages 18 to 39 who felt economic conditions were worsening increased 4 points to 44 percent.
- Those same consumers who felt their personal finances were getting worse increased 5 points from the previous month to 44 percent.
- 25 percent of 18-to 39-year olds felt their finances were getting better in May, a point lower than April.
“The optimism consumers between the ages of 18-39 showed the past couple months reversed course in May,” said Julie Loeger, senior vice president of brand and product management for Discover. “It is unclear whether this is simply a one-month anomaly or a sign of worse to come. Hopefully, consumer confidence among this age group will rebound heading into summer.”
Discretionary Spending Intentions Fall For the First Time in Four Months; Overall Spending Remains Flat
The decline in economic and financial confidence helped end a four-month increase in discretionary spending intentions. Overall, 10 percent of consumers said they would spend more on discretionary items, a 1-point decline from April. 56 percent of consumers planned to keep their overall spending flat in the month ahead.
There was also a 1-point decline in the number of consumers planning to increase spending in the following categories:
- Home remodeling or new appliances (decreased from 18 percent to 17 percent)
- Vacations or furthering their education (decreased from 16 percent to 15 percent)
- Sporting events, restaurants or hobbies (decreased from 11 percent to 10 percent)
More Consumers Rate the Economy as Poor, but 48% Have Money Remaining After Paying Monthly Bills
Fifty-one percent of consumers rated the economy as poor in May, a slight (1-point) increase from April. Forty-five percent feel economic conditions are getting worse, a 2-point increase from the previous month.
The decline in economic confidence didn’t affect how consumers currently view their finances. Overall, 35 percent currently view their finances as good or excellent, a 14-month high. Looking ahead, consumers were not as optimistic. Forty-seven percent felt their finances were getting worse, a 3-point increase from the previous month.
Despite the decline in confidence, 48 percent of consumers expect to have money left over after paying monthly bills. For fourteen months now, this number has been below 50 percent, though May’s 48 percent W is the highest since February.
The number of consumers expecting an income shortfall in the month ahead remained the same at 37 percent.
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 direct banking and 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 personal and student loans, online savings accounts, certificates of deposit and money market accounts through its Discover Bank subsidiary. Its payment 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 more than 185 countries and territories. For more information, visit www.discoverfinancial.com.
