The Discover U.S. Spending Monitor rose 1.4 points in May to 86.8 as consumers braced for higher spending in the wake of record gas and food prices. The card issuer released its report Wednesday.
Record-high percentages of consumers said they spent more in May than April (56%) and they expect to spend more next month (46%), both up by 6 points respectively. The upturns reflect a nation of consumers who are seeing spending for necessities grow and budgets for discretionary spending shrink.
The most important factor in the spending outlook appears to be the record-high price of gasoline. Last year at this time, 23% of polled consumers said they spent more than $200 a month on fuel. This May, with gas selling at more than $4 a gallon in many regions, nearly 36% report having to spend $200 or more each month at the pump.
Fuel costs caused 54% of consumers to cut living expenses and 59% said they are changing their summer vacation plans in response to rapidly rising energy costs.
"It seems clear that consumers are no longer choosing to spend more, but are being pressured to spend more due to record-high oil and food prices," Margo Georgiadis, executive vice president and chief marketing officer for Discover Financial Services, said.
Discretionary spending for things like entertainment and travel is taking the biggest hit as fuel and food costs escalate. In May, a record-high 54% of surveyed consumers said they would spend less on discretionary items next month. This compares with 46% who said this before pump prices began escalating in February.
The portion of those who say they will spend less on major personal purchases, like vacations, rose to 48% in May, a Monitor high and up 5 points over the last three months. Consumers are also cutting back on home improvement spending: A record 49% said they would be investing less in their homes next month.
Finally, a Monitor high 31% of consumers have less money left over than the previous month after paying bills, and 42% (another record number) say they are putting less money into savings and investments.
The U.S. Spending Monitor is based on interviews with 15,000 consumers conducted by Rasmussen Reports.