Aug 8, 2012, 7:00am

Concern over the economy and anticipation of higher expenses brought the Discover U.S. Spending Monitor to its lowest level of the year in July. The Monitor, a 5-year-old daily poll tracking economic confidence and spending intentions of nearly 8,200 consumers throughout the month, declined 1.4 points to 89.3. The monitor last dropped below 90 in December 2011.

Highlights of Discover U.S. Spending Monitor Results
		May		June		July
		2012		2012		2012
Discover U.S. Spending Monitor Index		95.5		90.7		89.3
U.S. Economy Improving		33%		29%		28%
Personal Finances Improving		25%		23%		23%

Economic Outlook Increasingly Pessimistic

The percentage of respondents reporting the U.S. economy as poor remained steady at 53 percent. However, consumers who expect the economy to get worse increased four percentage points from the prior month to 53 percent in June. This is the first time in 2012 that more than half of respondents felt this way.

• There was a significant increase in the percent of men who feel the economy is getting worse, up nine percentage points from June at 57 percent. The number of women feeling this way remained unchanged at 50 percent.
• While 57 percent of married people expect the economy to get worse (an increase of three percentage points from June), only 48 percent of single people expect the economy to get worse. However, this was a substantial increase from only 40 percent of single people with the same expectation in June.
• Forty-four percent of adults making more than $75,000 expect the economy to get worse, up one percentage point from June. For those making between $40,000 and $75,000, there was a two-percentage point increase to 55 percent. Nearly 59 percent of adults making less than $40,000 expect the economy to get worse, an increase of 10 percentage points from June.

Views on Personal Finances Remain Steady, Expectations Decline

• There was not a significant change in how respondents rate their personal finances in July – with 34 percent rating their personal finances as good or excellent (up one percentage point from June), 39 percent rating them as fair (down one percentage point) and 25 percent rating them as poor (up one percentage point).
• The percentage of respondents who expect their personal finances to get worse increased two percentage points from the previous month, to 49 percent. This is the highest level since December 2011.

Spending Intentions Increase Due to Rising Costs

While 28 percent of respondents plan to spend more next month (up two percentage points from June), this is primarily driven by an increase in non-discretionary items rather than a desire to spend more.

• With respect to household expenses, 38 percent of respondents expect to spend more next month on household expenses (up five percentage points from June), likely in response to gas prices. Expectations for spending on discretionary entertainment expenses, household improvements and major personal purchases remained similar to expectations in June.
• Respondents were asked for the first time in July if they plan to upgrade consumer electronics in the next three months. While 68 percent of respondents do not plan to upgrade, of those who do plan to upgrade, 45 percent are most likely to buy a mobile phone and 28 percent are most likely to buy a computer. Thirteen percent of those respondents plan to buy a tablet within the next three months.
• While the percentage of respondents who expect to save about the same amount next month remained unchanged from June at 48 percent, many respondents plan to adopt new cost savings measures in the next three months. Asked in the Monitor for the first time in July, 35 percent of consumers plan to either cancel vacations or dine at home rather than at restaurants in order to save money.

About Discover U.S. Spending Monitor

The Discover U.S. Spending Monitor^SM is a monthly index of consumer spending intentions and capacity that is based on interviews with a random sample of 8,200 U.S. adults conducted at a rate of 275 per night. In addition to spending, the survey asks consumers their opinions on the U.S. economy and their personal finances. The Monitor began in May 2007 with a base index of 100. Surveys are conducted by Rasmussen Reports, an independent survey research firm (http://www.rasmussenreports.com).

About Discover

Discover Financial Services (NYSE: DFS) is a direct banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company operates the Discover card, America's cash rewards pioneer, and offers home loans, private student loans, personal loans, online savings accounts, certificates of deposit and money market accounts through its direct banking business. Its payment businesses consist of Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation's leading ATM/debit networks; and Diners Club International, a global payments network with acceptance in more than 185 countries and territories. For more information, visit www.discoverfinancial.com.