Against this backdrop, nearly 57 percent of consumers rate the economy as poor, up nearly 2 points from April, and, for the third month in a row, more than half of consumers say economic conditions in the country are getting worse. In addition, reflecting the higher costs for fuel and food, May is the third month in a row that more than 50 percent of consumers expect higher household expenses. To offset those expenses, for the fifth time in the last six months, more than half of consumers say they will spend less on discretionary items.
The Monitor was flat for consumers’ attitudes about their personal finances as well. Twenty-six percent rated their personal finances as good, a slight increase from April, while the percentage of consumers who rated their finances as poor dropped to 23.4 percent, down from 24.7 percent in April.
“Higher costs for fuel, food and other household expenses are putting stress on American families, and continued high unemployment means there may not be much relief in sight,” said Julie Loeger, senior vice president of brand and product management for Discover. “With fewer people expecting to have money left over after paying bills, we know that discretionary spending – which helps fuel our overall economy – may continue to lag.”
May’s Monitor Reflects Differing Attitudes Among Household Income Levels
The results of May’s Monitor reflect different attitudes between households that make more than $75,000 a year and those that earn less than $40,000 annually.
For households that earn less than $40,000 annually, 60.2 percent said in May that they would not have money left over after paying bills at the end of this month. That figure is a record for the 4-year-old Monitor and a jump of 7.2 points from April.
At the same time, 77.7 percent of households making more than $75,000 annually said in May that they would have money left over after paying bills, which is the second-highest figure ever recorded in the Monitor and a 4.2 point jump from April. The only time sentiment for that question was higher was in August 2007, when 78.1 percent of those households said they would have money left over after paying bills.
Other differences between the two households:
- For those that make more than $75,000 annually, 26.2 percent plan to spend more next month on household improvements, nearly double the amount, 13.7 percent, of households that make less than $40,000 a year.
- Nearly 20 percent of households that make more than $75,000 annually plan to spend more next month on major personal purchases, compared to 14.4 percent of those in households that earn less than $40,000 annually.
- Of households earning more than $75,000 a year, 49.2 percent rate the U.S. economy as poor, compared to 60.9 percent of households making less than $40,000 who feel that way.
Less Savings, More Spending on Certain Items
May’s Spending Monitor reveals another record, as the percentage of consumers who said they planned to put less money into savings or investments next month grew to 42.3 percent. That figure is a jump of 2.5 points from April. At the same time, the percentage of people who plan to save or invest more next month dropped to 8.7 percent, the lowest figure since June 2010.
Despite the record number of consumers planning to save or invest less in the month ahead, consumers spending intentions in certain areas inched upwards in May:
- Home Improvement: 17 percent of consumers plan to spend more in this category, compared to 16 percent in April.
- Discretionary Entertainment: 11 percent of consumers said in May they would spend more in this category, up 3.1 points from April. However, 52.7 percent of consumers still plan on spending less in this category, virtually unchanged from last month.
- Major Personal Purchases: 15 percent of consumers plan to spend more on these purchases, an increase of nearly 2 points from April.
