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Stimulus” Will Not Save Economy!
Riva Froymovich
MarketWatch
Feburary 7, 2008
The Discover U.S. Spending Monitor fell to its lowest mark ever in January due to deteriorating perceptions of the U.S. economy.
The monthly index, compiled by Discover Financial Services, dropped 4.4 points to 86.1. In the survey of 13,500 U.S. adults, almost 71% of respondents agreed that the U.S. economy is getting worse and 48% believe that drop will affect their personal finances.
The index decline coincided with a six percentage point shift in the economic outlook. More than 41% of consumers in January described the state of the U.S. economy as poor compared with 35% in December - the first time the poor rating has exceeded 40% since Discover began tracking sentiment in May 2007.
When asked if the Bush Administration’s proposed economic stimulus package might boost sentiment and spending, respondents said no.
“Consumers do think that things are getting worse,” said Margo Georgiadis, chief marketing officer for Discover Financial Services in Riverwoods, Ill.
“Even as the tax proposals came in, consumer sentiment did not respond,” she said. “They’re concerned that the current economic trends are not likely to abate and therefore seem cautious to improve their outlook.”
That includes the higher income bracket, according to the report.
The index tracking sentiment for those with incomes of $75,000 or more dropped 8.2% in January, marking the first time that this demographic has shown any real signs of economic concerns since the U.S. credit crunch began last summer.
“They also were concerned about their personal finances,” said Georgiadis, and are actively planning to spend less on dining out, movies, travel and home improvement.
“(This group had) previously shown resilience in the face of economic pressure,” she said. “That really is an important signal that this pessimism about the economy is stretched across all groups.”
Nearly 60% of this income group said they would hold February spending on par with January. Last month that same sentiment was expressed by less 45%, with others favoring to spend more.
However, the downcast economic outlook did not fully affect overall spending patterns, according to the survey.
Of those surveyed, 81% of consumers say they would spend the same or more next month, while 48.5% of respondents did not expect added expenses or a sudden shortfall in income to affect their lifestyle or their current spending habits.
“At the same time, consumers seem to be ratcheting down plans for spending in areas beyond necessities,” according to Discover.
Nearly half of consumers intend to cut back on discretionary purchases as expected household expenses remain high.
The survey reported that 46% of consumers are struggling with high gasoline, groceries and mortgage payments - down a point from December, but still higher than the 35% reported in September.
At the same time, about 40% of consumers won’t have any money left over after paying monthly bills. This is also the second consecutive month that those who did have money left over fell below 50% of the survey pool. And yet, of that group, 17% responded that they will have more money left over this month than last and 60% said it will be the same.
“But with growing concerns over the economy and personal finances, the numbers show these consumers may be more intent to save their money right now rather than spend it, giving little boost to a slowing economy,” Georgiadis said.
MarketWatch
Feburary 7, 2008
The Discover U.S. Spending Monitor fell to its lowest mark ever in January due to deteriorating perceptions of the U.S. economy.
The monthly index, compiled by Discover Financial Services, dropped 4.4 points to 86.1. In the survey of 13,500 U.S. adults, almost 71% of respondents agreed that the U.S. economy is getting worse and 48% believe that drop will affect their personal finances.
The index decline coincided with a six percentage point shift in the economic outlook. More than 41% of consumers in January described the state of the U.S. economy as poor compared with 35% in December - the first time the poor rating has exceeded 40% since Discover began tracking sentiment in May 2007.
When asked if the Bush Administration’s proposed economic stimulus package might boost sentiment and spending, respondents said no.
“Consumers do think that things are getting worse,” said Margo Georgiadis, chief marketing officer for Discover Financial Services in Riverwoods, Ill.
“Even as the tax proposals came in, consumer sentiment did not respond,” she said. “They’re concerned that the current economic trends are not likely to abate and therefore seem cautious to improve their outlook.”
That includes the higher income bracket, according to the report.
The index tracking sentiment for those with incomes of $75,000 or more dropped 8.2% in January, marking the first time that this demographic has shown any real signs of economic concerns since the U.S. credit crunch began last summer.
“They also were concerned about their personal finances,” said Georgiadis, and are actively planning to spend less on dining out, movies, travel and home improvement.
“(This group had) previously shown resilience in the face of economic pressure,” she said. “That really is an important signal that this pessimism about the economy is stretched across all groups.”
Nearly 60% of this income group said they would hold February spending on par with January. Last month that same sentiment was expressed by less 45%, with others favoring to spend more.
However, the downcast economic outlook did not fully affect overall spending patterns, according to the survey.
Of those surveyed, 81% of consumers say they would spend the same or more next month, while 48.5% of respondents did not expect added expenses or a sudden shortfall in income to affect their lifestyle or their current spending habits.
“At the same time, consumers seem to be ratcheting down plans for spending in areas beyond necessities,” according to Discover.
Nearly half of consumers intend to cut back on discretionary purchases as expected household expenses remain high.
The survey reported that 46% of consumers are struggling with high gasoline, groceries and mortgage payments - down a point from December, but still higher than the 35% reported in September.
At the same time, about 40% of consumers won’t have any money left over after paying monthly bills. This is also the second consecutive month that those who did have money left over fell below 50% of the survey pool. And yet, of that group, 17% responded that they will have more money left over this month than last and 60% said it will be the same.
“But with growing concerns over the economy and personal finances, the numbers show these consumers may be more intent to save their money right now rather than spend it, giving little boost to a slowing economy,” Georgiadis said.
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Comment
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Comment by Ullan on February 14, 2009 at 12:04am
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You can prove anything with numbers and statistics.
98 percent of all people know that ;)
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