Consumer confidence fell for the second straight month in July, as the Discover(R) U.S. Spending MonitorSM dropped to its lowest level in more than two years and has dropped 11 points since January. The Monitor, a daily poll of 8,200 consumers tracking economic confidence and spending intentions throughout the month, now stands at 82.7, 2.4 points lower than June and the lowest level reported since March 2009, when it stood at 79.5.
Discretionary spending, a key driver of card-based spending, looks particularly weak:
Economic uncertainty has Americans pulling back their discretionary spending intentions. More than half of consumers, 53 percent, say they are reining in spending, a 4-point jump from last month. Those who say they will spend more on discretionary items or events like going out to dinner and the movies in the coming month slid to 8 percent, down from 11 percent in June.
Consistent with the weak housing market, the likelihood of home improvement spending also appears to be declining:
Fifty-four percent of consumers plan to spend less on home improvement purchases, up from 47 percent in June. Only 13 percent plan to spend more, dropping 5 points from June.
Discover also notes that 45 percent of respondents expect to save and invest less in the month ahead. While recent Fed data suggest the net savings rate has been up recently on a national basis, this does not necessarily reflect the sentiments of the broad range of U.S. households represented in sentiment surveys such as the Discover study. The Spending Monitor study clearly reflects ongoing broad weakness in consumer spending that is likely to drag out the economic recovery.
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