In yet another sign the U.S. economy might be thawing out a bit, consumers told Discover Financial Services in May that they were a bit more confident about the economy and would spend a little more money.
The number of consumers expecting to spend more in the month ahead rose to 20%. This rise coincided with an increase in the number of consumers expecting to spend more on household expenses like gas and groceries, the card issuer said. For May, 30% of consumers expected to spend more on household expenses, a five-point increase from April as gas prices reached their highest levels of the year. However, the five-point increase is still less than half of what was reported in May 2008.
With summer approaching, Discover also saw a two-percentage-point rise, to 16%, in the number of consumers expecting to spend more on major personal purchases like a vacation.
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But anticipated discretionary purchases like dining out and going to the movies remained largely flat, increasing less than one point to 10% in May. Nearly half, 49%, still plan on cutting back on these expenses.
Half are also expecting to spend less on home improvement purchases, the same as last month, and 38% of consumers said they'll be saving and investing less in the month ahead, nearly the same as last month.
"Consumers are feeling the economy is on the mend and their finances are improving, two things needed to revive consumer spending," said Julie Loeger, senior vice president of brand and product management for Discover Financial Services. "But just when economic conditions appear to be getting better, rising gas prices may give consumers a reason to continue cutting back on their discretionary spending intentions."
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