PR - Discover Spending Monitor Falls as Consumer Confidence Declines

Declining consumer confidence in the economy and personal finances drove a 3.4-point decline in the Discover U.S. Spending Monitor for November. Household expenses and holiday shopping have consumers preparing to spend more in December even as economic confidence has dropped to its lowest level in more than six months. Survey responses from 14,000 randomly sampled consumers (500 each night from November 1-28) put the Monitor at 93.4 compared to 96.5 in October.

Since Monitor surveying began in May of this year, the number of consumers rating the economy as good or excellent fell to 28 percent, a decline of nearly five points from last month. At the same time, consumers giving the U.S. economy a poor rating rose to nearly 35 percent, an increase of nearly six points from the previous month.

Overall, most consumers (51 percent) said they expect to spend more money in December, hardly a surprise given the time of year. This is compared to 35 percent who said they would spend more in November and an average of 33 percent making similar claims about month-to-month spending for the previous five months.

But rising expectations to spend more on gas, groceries and mortgage costs also is a key driver of increased spending among consumers. There was a striking 15-point increase – from 43 percent to 58 percent – in the number of consumers who said they expected to spend more on household expenses in December than they did in November.

To meet the increased household expense obligations in December, more consumers said they were expecting to spend less in December in virtually every other spending category tracked by the Monitor. For example, 45 percent of consumers expected to spend less on discretionary items like entertainment and electronics, an increase of nearly four points from last month’s survey, while 38 percent expected to spend less on savings and investment, up from 34 percent last month.

Indicators in the Monitor have so far shown steady holiday spending despite the increase in the number of consumers expecting to spend more on household expenses. Consumers had different opinions about their spending pre- and post-Thanksgiving. In the weeks leading up to the biggest shopping weekend of the year, as many as 55 percent of consumers said they would spend less this year than last, while 43 percent said they would spend the same or more. The week after Thanksgiving the number who said they would spend less on holiday gifts this year slipped to 50 percent, while the number saying they would spend the same or more jumped to 47 percent.

Though a majority of consumers (51 percent) say they will have money left over after paying December’s bills, they are cutting deeper into their monthly income to meet their obligations. In November, 25 percent of those with money left over said that the amount is less than the previous month, a new high for the Monitor.

A trend may be developing among consumers anticipating an added expense or an income shortfall over the next 30 days. The number steadily increased over the last three months from 35 percent in September to 41 percent in November.

November marked a reversal for consumers as attitudes about the economy and personal finances appeared to mirror each other. In previous months, consumers remained consistently confident about their personal finances in the face of growing economic concern.

Only 27 percent of consumers said that their finances were getting better these days, a full four points lower than the previous month and a new low for the Monitor. Conversely, a record 46 percent said they felt their finances were getting worse.