The Discover U.S. Spending Monitor shows that consumer confidence stayed low in May, although more people said that they intended to increase their spending slightly in the coming summer months. Lower gas prices may have prompted that bump in confidence, and 57 percent of respondents to the Discover survey said that gas prices affected their discretionary spending plans.
Discover Financial Services (NYSE: DFS), issuers of Discover credit cards, has sponsored The Discover U.S. Spending Monitor since May 2007. The Spending Monitor is based on the responses from a random sample of 8,200 American adults who are asked their opinions on the economy, their personal finances, and their spending habits.
U.S. Economy vs. Personal Finances
In March 2012, 35 percent of respondents said that they believed the U.S. economic picture was improving, but in May, only 33 percent said the same. What caused that two percent drop-off? Gas prices are slightly lower, but unemployment is still high and recovery may not be moving as quickly as consumers anticipated.
When it comes to personal finances, spring didn`t bring much sunshine to people`s outlooks. It was all April showers and no May flowers, as only 25 percent of respondents said their personal finances were improving – a two percent drop from April`s numbers – and fully 44 percent of those surveyed said that their financial picture was getting more dismal.
Spending intentions were slightly increased, with 17 percent of May respondents planning a major purchase in June. Major purchases can include vacations, which may account for some of those plans, with June bringing summer vacationers out of hibernation. In April, only 13 percent of those interviewed were planning a major purchase.
Discover asks people what they are planning to spend money on, with categories like gas, groceries, and home improvements. Of course, Discover is known for offering higher cash back bonuses in rotating categories that change each season, so they like to know where customers are planning to spend their money. In May, the responses were as follows:
- 37 percent said they were going to increase spending on gas and groceries
- 17 percent planned to increase spending on home improvements
- 51 percent planned to spend about the same as usual in all categories
What does the price of gas have to do with anything? Last month 46 percent of consumers in the Discover survey said that they would change their vacation and spending plans based on gas prices, and 57 percent said that gas prices would influence their discretionary spending.
While gas prices have been edging up over the past year, nearing five dollars a gallon across the country, over the past few months they have crept down slightly, trending down in all but seven U.S. states this week and currently below four dollars a gallon in most states, though major metropolitan areas in some areas are still averaging over four dollars a gallon.
Squeezing Out Savings with Cash Back Bonuses
Consumers can take advantage of credit card rewards to maximize their cash back – in July, August, and September Discover`s cash back bonus rotating categories rotate back to gas, giving card holders five percent back at the pump on up to $1500 in spending. That means $75 cash back – enough to fill that tank one more time, on Discover`s dime.