Consumer spending drops in June for first time in four months

07.09.09
By Lewis Green

Summer months usually have Americans spending more money on trips to the beach or other getaway spots but a new report finds that consumers have less disposable income and are more concerned about the state of the economy.

After steadily rising for the last three months, the most recent Discover U.S. Spending Monitor dropped in June as consumers appear to be concerned about increasing prices as credit card debts rise and feel the economy is not improving.

One concern for Americans continues to be the amount of discretionary income they have after paying for necessities. According to the study, less than half (47 percent) of consumers say they have money left over after paying bills each month. This is the third straight month that this figure has dipped below 50 percent and is a 1 percent drop over May's figure of 48 percent and may be related to more consumers attempting to pay down their credit card debt.

Another issue for consumers seems to be employment figures, which appear to be causing many people to sour on the idea of an economic turnaround. Julie Loeger, senior vice president of brand and product management for Discover Financial Services, says the recent uptick in consumer sentiment appears to have eroded.

"The optimism we were seeing from consumers in terms of the economy over the past few months may have hit a roadblock in June," she said. "With unemployment still rising and uncertainty as to whether the economic recession is ending, consumers are seeing no reason to change the spending restraint they’ve exhibited over the last several months."

While there are not many bright spots in the economy of late, a new study does show that it is having at least one small positive effect on Americans - less time in traffic. According to the recent Texas Transportation Institute study, the recession may be causing Americans to cut down on their time behind the wheel, easing traffic congestion.

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