The Monitor is reporting that consumers are once again showing signs of off-setting high prices at the pump with cuts in discretionary spending. Overall, 33 percent of consumers expect to spend more in the month ahead, an 8-point rise from February. As well, for the first time since July 2008, a majority of consumers, 55 percent, are planning to spend more on gas, groceries and their mortgages. This number jumped 14 points from February.
It is noted that consumers expect to spend less on entertainment, home improvement, and travel and memberships, important discretionary spending categories which can be crtical indicators of improving sentiment. Clearly, households are constrained by their current resources, with less than half expecting to have money left over for discretionary spending.
Despite consumers best efforts to balance their budgets in the wake of high gas prices, 42 percent say they are expecting an income shortfall in the next 30 days, 6 points higher than February and the biggest jump in the Monitor’s history. The jump comes despite the fact that 48 percent plan to have money left over after they pay their bills for the month, unchanged from February.
However, it has been two years since a majority of consumers reported having money left over. Furthermore, 27 percent of those consumers who do have money left over expected to have less money left over than the month before, a five-point rise from February.