Consumer confidence fell for the third straight month as more consumers rated current economic conditions as poor, and fewer see the economy improving, according to the Discover U.S. Spending Monitor for July 2010.

The Monitor – a poll of 8,200 consumers tracking consumer confidence and spending intentions on a daily basis – fell 1.9 points in June to 86.5. Overall, 58 percent rate the U.S. economy as poor, a 7-point increase from June, and only 23 percent see economic conditions improving in the month ahead, the lowest this number has been in a year.

As Confidence Falls, So Do Spending Intentions

Consumers’ spending intentions had held steady and even risen during the spring and early part of summer. But July’s sharp decline in economic confidence may have consumers altering their spending behavior. Twenty-six percent of consumers reported they are planning to reduce their overall spending in the month ahead, a 3-point rise from June and the highest number reported since January.

Monitor data also suggests that consumers plan to reduce discretionary spending in the following areas:

- Going out to dinner, movies or sporting events (48 percent compared to 46 percent in June)

- Home remodeling or new appliances (48 percent compared to 47 percent in June)

- Vacation, or gym membership (48 percent compared to 46 percent in June)

“Economic uncertainty appears to be weighing on consumers’ discretionary spending intentions,” said Julie Loeger, senior vice president of brand and product management for Discover. “In the spring, more consumers felt the economy was improving and that correlated with an overall increase in discretionary spending intentions. Monitor data now suggests consumers’ economic confidence is declining, and with that, so are their discretionary spending intentions.”

Despite Economic Pessimism, More Consumers Feeling Better About Their Finances

While economic confidence continued to fall, the Monitor showed more consumers feel better about their finances. Thirty-six percent felt their finances were in good or excellent shape, a 3-point improvement from the prior month and the highest number in 20 months. The Monitor also reported that 21 percent of consumers felt their personal finances were improving in July, 1 point better than June.

The improvement in consumers’ financial attitudes correlated with more consumers having money left over. For the second straight month, 49 percent of consumers said they expected to have money left over, the highest number since March 2009.

The number of consumers expecting an income shortfall in the month ahead remained the same in July at 38 percent.