The most recent Discover Financial Services' U.S. Spending Monitor survey suggests that credit unions will have to wait a bit longer for members' credit card use to return to previous levels.
The firm dropped its index of U.S. consumer spending intentions from 86.2 in May to 85.6 in June and reported that, overall, 59% of those surveyed rated the state of the U.S. economy as poor, an increase of four percentage points over the previous month.
For the third straight month, less than half of consumers, 47%, have money left over after paying the monthly bills, one percentage point lower than the previous month. Of those who do have money left over, 79% plan on having the same or more money left over than the previous month, a one-point increase from the previous month, Discover reported.
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"The optimism we were seeing from consumers in terms of the economy over the past few months may have hit a roadblock in June," said Julie Loeger, senior vice president of brand and product management for Discover Financial Services. "With unemployment still rising and uncertainty as to whether the economic recession is ending, consumers are seeing no reason to change the spending restraint they've exhibited over the last several months."
The number of consumers expecting to spend more in the month ahead rose to 23% in June, the highest this number has been since November 2008. The rise coincided for the second straight month with an increase in the number of consumers expecting to spend more on household expenses like gas and groceries. For June, 35% of consumers expected to spend more on household expenses, a five-point increase from May and a 10-point increase in the last two months. June saw the highest gas prices of the year nationwide.
To adjust for an increase in household expenses, consumers planned cutbacks on discretionary purchases like going out to dinner or the movies, Discover said. Over half, 51%, plan to spend less in the month ahead on discretionary purchases, a two-point increase from the previous month.
Half of consumers are also expecting to spend less on home improvement purchases, the same as last month, and 48% of consumers said they'll be spending less on major personal purchases like a vacation, also the same as last month. Even consumer savings wasn't immune to possible cutbacks, as 40% of consumers planned on saving and investing less in the month ahead, a two-point increase from the previous month.
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