PR - Discover Spending Monitor Drops­­ in December

With the passing of the holiday shopping season, consumers are expecting to scale back their spending in January, as ratings of the economy and their personal finances worsened. The decline in spending intentions, which returned to levels reported before the holiday shopping season began, helped drive a 2.6 point drop in the Discover U.S. Spending Monitor for December. Adding to the decline was an expected budget hangover from the holidays, as fewer than half of the nation’s consumers had money left over in December, the lowest level since last June.

Survey responses from 12,500 randomly sampled consumers (500 each night from Dec. 1-31 except for the Christmas and New Year’s holiday periods) put the Monitor at 90.5 compared to 93.1 in November.

Just over 31 percent of consumers are expecting to spend more in January, a 20-point drop from what consumers expected to spend in December, but consistent with average numbers reported in the months preceding the holiday shopping season. The number of consumers expecting to spend less in January jumped to 24 percent, compared to just 11 percent in December.

Expectations to spend more on gas, groceries and mortgage costs in January also fell to 49 percent, but remains 10 points higher than the average reported in the summer and fall. In fact, four out of the five spending category questions tracked by the Monitor – including discretionary personal expenses, household improvement expenses, and major personal expenses – showed a decline in the number of consumers who expect to spend more in January. Saving and investing was the only category in which consumers expected to contribute more.

“Not surprisingly, consumers are modifying their spending habits after the holidays,” said Margo Georgiadis, executive vice president and chief marketing officer for Discover Financial Services. “Expected household expense pressures remain high with nearly 50 percent of consumers expecting to spend more in this category. To compensate, consumers seem to be holding the line on discretionary spending while saving more. With oil prices reaching $100 a barrel and pump prices escalating, these trends are likely to continue.”

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39 Percent Have No Money Left Over After Paying Monthly Bills

Consumers faced tighter budgets in December and had to dive deeper into their incomes to meet their monthly expenses. For the first time since June, less than a majority (49 percent) expected to have money left over after paying their monthly bills. Furthermore, December marked the fourth consecutive increase in the number of consumers expecting to have no money left over after paying monthly bills, topping out at more than 39 percent. Of those who had money left over, 27 percent had less left over than the previous month, a Monitor high, and a number that has also increased four months in a row.

Consumers Concerned About the Economy and Their Personal Finances, But More See Better Days Ahead

Only 27 percent of consumers rate current economic conditions as good or excellent, a new low for the Monitor. At the same time, consumers rating the economy as poor rose to 36 percent, a new high.

Singles and families with children showed more concern about the economy than those married and with no children. Nearly 40 percent of unmarried people rated the economy as poor while just over a third of married people felt the same way. Just 32 percent of those married without children rated the economy as poor while nearly 40 percent of people with children gave poor ratings to the economy.

After hitting a low in November, more consumers saw brighter days ahead for the economy in December. Overall, nearly 30 percent felt economic conditions were the same or getting better, compared to 28 percent in November. Sixty-six percent felt economic conditions were getting worse, a 1-point decline from November.

Continued concern over the economy correlated with a drop in confidence consumers felt about their personal finances. Twenty-two percent, the highest since Monitor polling began, rated their finances as poor. But slightly more consumers in December saw better days ahead with nearly 28 percent saying their personal finances were getting better, up a point from November, and 46 percent saying their personal finances were getting worse, down a point from November. Overall, a majority (52 percent) of consumers expected their finances to be the same or better in the month ahead.

The Discover U.S. Spending Monitor is a monthly index of consumer spending intentions and capacity that is based on interviews with a random sample of 15,000 US adults conducted at a rate of 500 per night. In addition to spending, the survey asks consumers their opinions on the U.S. economy and on their personal finances. Weekly reports reflect calculations for the seven previous days of interviews, or a sample of 3,500 adults. Surveys are conducted by Rasmussen Reports, an independent survey research firm.