Consumer sentiment declined significantly in June, as the Discover U.S. Spending Monitor recorded its largest one-month drop ever, moving downward 4.4 points from 89.5 to 85.1. The monitor, a daily poll of 8,200 consumers tracking economic confidence and spending intentions throughout the month, showed significant numbers of Americans who believe both the overall economy and their personal finances are worsening. Month to month vacation spending has ben flat, the Monitor reports.
The current index is the worst recorded since July 2009, the Monitor says, and comes after few months of little change in consumer confidence despite high gas prices and other financial pressures. In June, however, more than 60 percent of U.S. adults rated the economy as poor, up nearly 4 percentage points from the month before, and nearly 56 percent say the economy is getting worse, a jump of nearly 5 percentage points from those who had that view in May.
Furthermore, for the first time since July 2009, more than half of respondents report that their personal finances are worsening. That figure, at 51 percent, is up from 48 percent the previous month.
The drop in confidence comes even though the number of people concerned they will spend more on household expenses in the following month dropped 10 points from May to June. Just 43 percent now say they expect higher household expenses, which includes groceries and gas.
"The recent dip in gas prices did not appear to have any impact on consumers' views toward their personal finances," said Julie Loeger, senior vice president of brand and product management for Discover. "In the absence of good economic news, such as on the jobs front or with housing prices, more Americans are growing pessimistic about their long-term financial outlook and the outlook for America's economy generally."
The results of June's Monitor reflect different attitudes about the economy by different age groups, with older Americans reflecting a decidedly negative view about the future. In June, nearly 59 percent of Americans who are at least 65 years old said the economy is getting worse, compared to just more than 47 percent of that group who felt that way the month earlier.
In addition, more than 56 percent of this age group say that their personal finances are worsening, up from just less than 52 percent the month before.
Other differences in ages:
• 58.1 percent of consumers ages 40 to 64 believe the economy is getting worse, a figure that moved from 54.8 percent in May. In that age bracket, 55 percent now feel their personal finances are worsening, up from 52.5 percent in May.
• Younger Americans, ages 18 to 39, are more optimistic compared to their elders about the economy, but their outlook is worsening. Of that age group, nearly 53 percent believe the economy is worsening, an increase of more than 4 percentage points from the month before. In addition, nearly 47 percent of that group believes their personal finances are deteriorating, an increase of nearly 3 points from the month before.
Despite growing concern over the economy and their personal finances, June's Monitor showed more consumers are planning to spend on household improvements. Just over 18.2 percent plan to spend more on improvements, which is up 1 point from May, and is the highest figure for that category since May 2008. Beyond spending on household improvements, discretionary spending on dining, entertainment and vacations was flat month-to-month.
At the same time, a slightly higher number of Americans are reporting they expect a shortfall in income or increase in expenses this month. Just over 42 percent of Americans are expecting that shortfall, compared to 41 percent in May. This is the fourth straight month this number has been above 40 percent. However, for the first time in four months, the Monitor reported an increase in the number of consumers who expect to have money left over after paying monthly bills. Forty-seven percent of consumers plan to have money left over compared to 45.7 percent in May.