The Discover U.S. Spending Monitor, a monthly index of consumer spending intentions and capacity based on surveys conducted by Rasmussen Reports found consumer confidence down by 4.3 points in the 2010 holiday season. The index hit a three-year high in November, but 56 % of consumers still rate the economy as poor, just a two-point increase from November. Twenty-nine percent of consumers feel economic conditions are getting better; this figure is down two points from November.

Some other interesting statistics?

  • 26 % of consumers rated their finances as poor
  • 46% say their finances are getting worse, up one point from November
  • 33% of consumers say they expect to spend less in January, v. 18.5 % who said they expected to spend less in December than in November
  • More consumers expect to trim their discretionary expenses in January

Where do American plan to cut?

  • 52% plan to spend less on eating out and movies next month, down one point from 2009
  • 50% plan to spend less on home improvements, down 3 points from 2009
  • 48 % plan to spend less on vacations or gym memberships, down 3 points from 2009
A More Optimistic View?

Let’s look at these figures in a more optimistic light, however. Discover reps note that spending — and spending expectations — is usually down in January as people recover from Christmas. And the rest of the changes are just a few index points — not a significant difference from November. It’s understandable that people feel the crunch in December. If anything, it shows people were more optimistic about the economy because they did spend during the holidays. And as far as discretionary spending? Writing a budget and spending less is a New Year’s resolution on the lists of many Americans. And we all know how long those last.

It’s also pretty clear that Americans splurged on holiday spending this year. Only 46% of those polled reported having money left over after paying bills, down 3 points from November. Forty-two percent are expecting an income shortfall in January, the same amount as in December 2009.

Still, The News Is Bad

More telling — and less optimistic — is the statistic that more than half the country still feels the economy is poor, and only 29% believe it’s getting any better. This has to do with a number of factors, including increasing gas and fuel prices, a long, cold winter, (in conjunction with those high fuel prices), and talk of runaway inflation and government legislation as U.S. debt threatens to hit the debt ceiling. Almost immediately.

This article in the Washington Times reports that Treasury Secretary Timothy F. Geithner said in a letter to Congress: “Failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses and could lead to the loss of millions of American jobs.”

Protect Your Finances

What’s the best way to protect yourself in the coming months, and join those 46% with money left over after paying the bills? Here are some tips:

  • Use credit wisely — only charge what you can afford to pay off by the end of the month
  • Shop carefully — use store rewards cards and shop through credit card rewards portals to get the best deals and cash back or points
  • Cash in your credit card points for a statement credit or treat yourself to something nice
  • Pay your bills on time; don’t get hammered with late fees
  • Watch your credit score; excellent credit can save you thousands of dollars a year
  • Track your finances with a budget and programs like Mint.com
  • Shop around on CreditShout.com for the best interest rates on credit cards