Instead of hoping for financial freedom at the end of the tunnel, most are seeing a never-ending train ride of debt and unemployment, new data reveals.
For the first time since February, an increase occurred in the number of consumers who believe that economic conditions are deteriorating. Fifty-two percent of those surveyed feel like the market is getting worse and about the same amount feel as if their own financial situation is declining as well, according to the July 2009 Discover U.S. Spending Monitor.
The Monitor, a monthly measure of consumer confidence and spending, also found that the consumers are continuing to cut back spending in all areas. Those planning on spending more money in the month ahead, including on household expenses like groceries and gas, fell to 21 percent, the first drop since February.
“The optimism consumers showed about the economy during the spring has faded during the summer,” said Julie Loeger, senior vice president of brand and product management for Discover, in a press release. “Unemployment is still rising and while some are saying the worst is over, the majority of consumers surveyed by the Monitor in July currently don’t feel that way. Until they do, consumers are unlikely to start spending again.”
Even lower gas prices can’t lure wary customers and their wallets to the movies to restaurants. Fifty-three percent of Americans are planning to spend less on nonessential purchases such as entertainment and dining out. Over half are also planning to cut back on home improvement expenditures and large personal purchases, such as vacations.
Reeling in discretionary purchases hasn’t even led to more money in the bank for some. Forty-two percent expect to save or invest less next month than they did last month. Only 47 percent think they will have money left over after paying their off monthly bills.
“Despite some positive signs in the economy, consumers are showing no intentions of increasing their spending,” Loeger said. “With a Monitor-low 32 percent feeling their personal finances are good or excellent, it is no surprise that consumers are continuing to cut back.”
See related: Consumers hold back on discretionary spending