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Consumers felt slightly less pessimistic about the economy in January, though they continue to clamp down on spending, suggests a new report Discover Financial Services released today. The Riverwoods, Ill.-based company's monthly U.S. Spending Monitor inched up 1.2 points in January to 77.8, the first increase in five months. It follows a record low of 76.6 set in December. Discover pegged the index at 100 when it introduced it in May 2007. In January, 64% of those polled said believe the economy is getting worse, compared with 71% who said so in December. And only 52% of respondents believe their own finances are getting worse, compared with 54% who said so in December. For only the second time in the monitor's history, the percentage of consumers who plan to spend less in the following month (29%), exceeds the percentage that said they plan to spend more (17%). Respondents indicated they are cutting spending across many categories, with 55% planning to spend less on entertainment and dining out, 52% cutting back on home improvements and 51% slashing major personal purchases. A record high of 70% of respondents said they will hold the line or spend less on routine household expenses, compared with 53% a year ago. A record low of 28% said they would bump up spending on household expenses. "Job losses and a poor economy have definitely replaced high gas prices as primary drivers of discretionary spending," Julie Loeger, Discover's senior vice president of marketing, said in a statement. Rasmussen Reports conducts the survey, which is based on a random sample of 15,000 U.S. adults interviewed by telephone each evening throughout the month.
