Discover® U.S. Spending MonitorSM Drops 3.3 Points in December, as Consumers Anticipate Spending Less after the Holidays
Middle-Income Consumers Give Holiday Retail Sales a Boost by Spending More Than Anticipated
RIVERWOODS, Ill.--(
BUSINESS WIRE)--The Discover U.S. Spending Monitor fell 3.3 points in December to 83.0 (based out of 100). The decline was primarily driven by a big decrease in post- holiday spending intentions from consumers. While the decrease in spending intentions was anticipated, consumers showed little improvement in economic confidence in December and they grew slightly more pessimistic about their finances. These contributing factors leave the Monitor’s index standing at a nine-month low.
Overall, 57 percent of consumers rated the economy as poor, a 2-point improvement from November. Forty-eight percent of consumers felt economic conditions were getting worse, 1 point better than November. The number of consumers rating their finances as poor went up a point to 26 percent. Half of consumers now think their finances are getting worse.
Despite concern over the economy and their finances, consumers did not cut back on holiday spending as much as they anticipated, a welcome sign for retailers. The Monitor’s findings were reflected in the National Retail Federation’s report showing an increase in holiday sales from last year. In the weeks leading up to Christmas, 64 percent of consumers said they planned on spending less on gifts. But when asked after Christmas if they spent more or less on gifts this year, only 51 percent said they spent less.
Middle-Income Consumers Show Biggest Increase in Actual Versus Planned Holiday Spending
A big driver in the increase in holiday sales may have come from middle-income consumers ($40k-$75k). Heading into Christmas, only 6 percent of middle-income consumers planned on spending more on holiday gifts. But after Christmas, 18 percent said they actually spent more, a 12-point increase. Twenty-two percent of upper-income consumers ($75k or more) spent more on gifts, a 9-point increase, and only 11 percent of lower-income consumers (under $40k) spent more on gifts, a 1-point decrease between anticipated and actual holiday spending.
“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.”
December’s Monitor showed consumers were planning to do just that, with only 20 percent expecting to spend more in the month ahead, the same number reported in December 2008. A majority of consumers also plan to cut discretionary spending in all categories surveyed by the Monitor, a trend that hasn’t changed since September. There was a 2-point increase to 10 percent in the number of consumers planning to save and invest more.
Monitor-Low 43% Have Money Left Over After Paying Monthly Bills
While a lift in holiday sales was good news for retailers, a record number of consumers found little to cheer about when paying the monthly bills. Only 43 percent, a Monitor-low, expected to have money left over after paying the monthly bills. This is the second time in three months the Monitor has broken a new low in this category, breaking October’s previous low of 44 percent.
Middle-income consumers were the biggest contributors to the decline. Only 44 percent of them planned on having money left over, 15 points lower than in November. Lower-income consumers showed only a 1-point decline and upper-income consumers showed a 3-point decline.
Furthermore, 26 percent of those consumers who do have money left over said they would have less money left over than the previous month, a 12-month high.
Middle-Income Consumers See Little Change in the Economy, Grow More Concerned Over Finances
Fifty-six percent of middle-income consumers rated the economy as poor in December, unchanged from November. Lower and upper-income consumers rating the economy as poor actually dropped 2 and 3 points respectively.
Middle-income consumers also viewed their finances differently from lower and upper-income consumers. Forty-four percent felt their finances were getting worse, a 6-point increase from November. Lower-income consumers feeling their finances were getting worse actually dropped 2 points to 58 percent and 35 percent of upper-income consumers felt their finances were deteriorating, unchanged from November.
“Budgets for many consumers are tight, especially during the holidays,” said Loeger. “With middle-income consumers increasing their spending the most during the holidays, it is no surprise that they expect to have less money left over and are growing more concerned about their finances.”
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 more than 185 countries and territories. For more information, visit
www.discoverfinancial.com.
