Discover U.S. Spending Monitor Up 2 Points in September

Despite a Monitor high in economic sentiment, consumer spending intentions remained flat in September, a cause for concern for retailers who are hoping consumers will increase their spending as we approach the holidays.

Only 19 percent expect to spend more in the next 30 days, continuing a 4-month decline and down a point from August. Fifty-four percent said they planned on spending the same amount, up 2 points.

More consumers are expecting to spend the same next month on discretionary spending as well. Thirty-nine percent of consumers planned on spending the same amount of money on going out to dinner, or the movies in the month ahead, a 21-month high and 2-point increase from August. About 32 percent plan to spend the same on home improvements, a high not reached since February 2008. Thirty-six percent plan on spending the same on major personal purchases over the next 30 days, a 12-month high. Half of consumers are also planning on saving and investing at the same rate over the next 30 days, a 2-point increase from last month.

“After months of cutbacks, consumer spending intentions appear to be leveling off, a sign that they are content with the spending cutbacks they made,” said Julie Loeger, senior vice president of brand and product management for Discover. “A cause for concern is there appears to be no indication consumers are willing to increase their spending, despite a Monitor-high number of them who feel the economy is getting better.”

Compared to a year ago, just 12 percent of consumers felt the economy was getting better, yet 10 percent still expected to spend more on discretionary purchases in the month ahead. Today, only 8 percent are expecting to spend more on discretionary purchases despite 33 percent feeling the economy is getting better.

A discouraging trend continued in September, when for the sixth straight month, less than half of consumers expected to have money left over after paying monthly bills. Only 47 percent expected some extra cash, a point increase from August. However, of those who expect to have money left over, 80 percent said they would have the same or more money left over than the previous month, a high not reached since April.

Furthermore, only 38 percent were expecting an added expense or income shortfall in the next 30 days, a 2-point decrease from August and the lowest since April.

Over half, 52 percent, currently rate the economy as poor, a 13-month low and down 3 points from August. Only 43 percent of consumers feel economic conditions are getting worse, also a Monitor low and 3 points lower than last month.

While consumers showed improved economic sentiment, they were not as optimistic about their financial outlook. Thirty-three percent currently rate their finances as good or excellent, a 1-point increase from last month. But there was an increase of a point to 48 percent who feel their finances are getting worse.

“Consumers definitely feel economic conditions are getting better, but over half still rate current economic conditions as poor,” said Loeger. “Combine that with uncertainty as to where their personal finances are headed and you can see why consumers are still very cautious with their spending intentions. Unfortunately, the Monitor is showing no signs that consumer attitudes may change as we head into the holiday shopping season.”

For more Discover U.S. Spending Monitor survey data, charts and information, please visit http://www.discoverfinancial.com/surveys/spending.shtml.