Consumer confidence grew again in February, driven by a more optimistic outlook for the economy and personal finances, the Discover U.S. Spending Monitor reports. Yet, despite the coming of Spring break for many consumers, expectations for spending on major personal purchases, like vacations, in the next month remained unchanged from the prior month at 12 percent.
The 4-year-old daily poll tracks economic confidence and spending intentions of nearly 8,200 consumers throughout the month reports a jump of 4.4 points from the previous month to 94.9. This is the highest level the Monitor has reached since October 2007, Discover says.
Highlights of the Discover report include:
Economic Expectations Growing, Particularly Among Men:
• Expectations for the U.S. economy are improving. For the first time since January 2011, nearly one-third of consumers, or 32 percent, believe the economy is getting better. This is 2 percentage points higher than the prior month.
• While more than half, or 52 percent, of consumers rate the U.S. economy as poor, this is the lowest level since January 2011. Only 12 percent of respondents view the economy as excellent or good, an increase of 1 percentage point over last month and 3 percentage points compared to February 2011.
• More than 35 percent of men view the economy as getting better, an increase of nearly 5 percentage points over January 2012. However, only 29 percent of women share the expectation that the economy is getting better, and this level did not change from last month.
Personal Finance Confidence Reaches Pre-Recession Levels:
Consumer sentiment about personal finances continued to improve in February.
• More than 36 percent now rate their finances as either excellent or good, which is the highest figure in more than a year and a jump of 2 points from the month earlier.
• Nearly one-quarter, or 24 percent, of consumers believe their personal finances are getting better. Forty-three percent view their finances as getting worse, which is 4 percentage points lower than last month and the lowest level since October 2007.
• There were fewer consumers with higher incomes (above $75,000 annually) and lower incomes (below $40,000 annually) viewing their personal finances as worse compared to last month. These figures declined by 6 percentage points to 29 percent and 3 percentage points to 55 percent, respectively. The portion of middle-class income consumers who view their personal finances as getting worse remained unchanged at 42 percent from January 2012.
• Nearly 50 percent of consumers reported they had money in their pockets after paying bills last month, the highest level since March 2009.
Consumers Remain Cautious About Spending Intentions:
Consumers’ growing confidence in the economy and their personal finances is not substantially boosting purchasing intentions. While 28 percent say they plan to spend more next month, a 4-point increase from the month before, the most significant increase came from a spike in household expenses, such as gasoline and groceries.
• Spending next month on household expenses, including gasoline, is most likely to increase. More than 44 percent of consumers expect to spend more, an increase of 7 percentage points compared to the prior month. Gas prices are near the record high of $4.11 set in July of 2008, when more than 57 percent of consumers expected spending on household expenses to increase in the next month.
• Historically, the Monitor said it experiences an uptick in home improvement spending in the Spring. In February 2012, 14 percent indicated they plan to spend more, a 2-point increase and the highest level for the month of February since 2008.
• Nearly 10 percent of consumers expect to spend more on discretionary purchases like going out to dinner or the movies, a slight increase of 2 percentage points compared to the prior month.