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Discover Fincl: Consumers Cut Back On Discretionary Spending

May 7, 2008 Market Outlook

Discover Fincl: Consumers Cut Back On Discretionary Spending

Last Update: 5/7/2008 9:43:11 AM

DOW JONES NEWSWIRES

Consumers continue to show little confidence in the U.S. economy in the face of
record high gasoline prices and the effects of the sub-prime mortgage crisis,
according to Discover Financial Services’ (DFS) monthly survey of consumer
spending intentions.

In the meantime, the number of consumers who say they are spending more,
particularly on household expenses, rose for the third straight month to 38%.

In the month Americans were filing their income tax returns, 62% said they
expected to receive a refund this year. Reflecting the continuing strain on
households from the downturn in the economy, 62% of those expecting a refund were
planning to spend it on basic household expenses or debt payment. Just 18% said
they intended to save or invest the income and 20% planned to put money back into
the economy.

Of those consumers expecting a tax rebate from the economic stimulus package, a
similar number - nearly 59% - said they planned to spend the funds on household
expenses and paying down debt. Some 18% expected to save or invest, with 11%
planning household improvements and 8% anticipating a vacation.

Many consumers continue to cut their discretionary spending habits and even their
savings in the wake of higher household expenses, the survey found, adding that
nearly 56% expect to spend more on household expenses in the next month.
Fifty-one percent were expecting to spend less on discretionary personal
expenses, such as dining out or going to the movies, a new survey high. Almost
half - 46% - expected to cut back on home improvements and major personal
purchases, including vacations, also a survey high.

Discover Financial Services said savings remained relatively flat in April
compared to a month ago, with 39% of respondents expecting to save or invest
less.

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Technorati Tags: Consumer Spending, Debt Payment, Discretionary Spending, Dow Jones, Dow Jones Newswires, Downturn, Economic Stimulus Package, Gasoline Prices, Home Improvements, Household Expenses, Households, Income Tax Returns, New Survey, Personal Expenses, Personal Purchases, Respondents, Spending Habits, Sub Prime Mortgage, Sub Prime Mortgage Crisis, Tax Rebate

Tags: Consumer Spending, Debt Payment, Discretionary Spending, Dow Jones, Dow Jones Newswires, Downturn, Economic Stimulus Package, Gasoline Prices, Home Improvements, Household Expenses, Households, Income Tax Returns, New Survey, Personal Expenses, Personal Purchases, Respondents, Spending Habits, Sub Prime Mortgage, Sub Prime Mortgage Crisis, Tax Rebate