Ahead of the Bell: Consumer spending index creeps higher

NEW YORK—Discover Financial Services said Wednesday its index of U.S. consumer spending rose slightly in April as shoppers expressed worry over rising household expenses.

The April Discover U.S. Spending Monitor, which surveyed 12,500 adults about their spending habits, rose to 85.4 from an all-time low of 85.1 in March.

Consumer spending accounts for two-thirds of total economic activity. Discover said the results signal lack of confidence in the U.S. economy among consumers burdened with higher gasoline prices, rising household expenses and the fallout from the subprime mortgage crisis.

Seventy-four percent of consumers said they feel the economy is getting worse, while 52 percent said their personal finances are headed in the same direction, Discover said.

Moreover, few consumers expect tax refunds or the economic stimulus package to ease the strain on the economy or their personal finances, Discover said.

Among the two-thirds of those surveyed who expect a refund on their tax return, 62 percent said they would spend the money on debt or basic household expenses, while 18 percent said they expected to put it into savings or investments, Discover said. Only 20 percent said they planned to put the money back into the economy.

The outlook was similar among consumers expecting a tax rebate from the economic stimulus package. Seventy-seven percent said they would spend the windfall on household expenses, debt or savings, while 11 percent said they would spend it on household improvements and 8 percent said they planned to spend it on a vacation.

The Discover Consumer Spending Confidence Monitor measures consumer spending intentions and opinions on the U.S. economy.