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Consumer confidence drops due to darkening expectations,
according to RBC CASH Index
NEW YORK, March 10, 2006 — After an upturn in
February 2006, consumer confidence dropped in March, reflecting
the uncertainty American consumers have about future economic
conditions, according to the most recent results of the RBC
CASH (Consumer Attitudes and Spending by Household) Index,
which measured the attitudes of 1,000 Americans this week.
Issued today by RBC Financial Group, the RBC CASH Index for
March stands at 86.2, a considerable decrease from 96.1 in
February.
"Higher interest rates are beginning to take a toll
on how people view their finances. Mortgage rates are nearly
as high as they have been over the past three years, and the
slowdown in the housing market is becoming more apparent,"
said Vincent Boberski, director of Fixed Income Research for
RBC Dain Rauscher. "The jobs picture is encouraging,
though, and higher incomes should help offset the negatives
as we move into the spring and summer."
Regarding the long-term outlook, Boberski added, "While
growth is likely to slow during the second half of the year,
the economy still has a good deal of momentum and we should
see continued evidence of that over the coming months."
RBC's CASH Index is a monthly national survey of consumer
attitudes on the current and future state of local economies,
personal financial situations, savings, and confidence to
make large investments. The Index, which is comprised of four
sub-indexes: RBC Current Conditions Index, RBC Expectations
Index, RBC Investment Index and RBC Jobs Index, is benchmarked
to the 100 reading assigned in January 2002 when it was first
introduced. This month's findings are based on a representative
sample of 1,000 adults polled nationwide between March 6-8,
2006, by survey-based research company Ipsos Public Affairs.
Highlights of the survey results include:
- The RBC Current Conditions Index for March 2006
stands at 103.9, down from 111.6 in February 2006, with
more than one quarter (27per cent) rating their current
local economy as weak (compared to 24 per cent in February
2006). While those rating their current financial situation
as strong held steady (28 per cent strong in February 2006;
26 per cent strong in March 2006), the net difference (total
strong minus total weak) has narrowed from +6 in February
2006 to +3 in March 2006. The March drop in confidence regarding
current conditions represents the first significant drop
since July 2005.
- Expectations for local economies have worsened. The RBC
Expectations Index for March dropped significantly from
59.4 in February to 40.7. Currently, one in five respondents
(18 per cent) feels their local economy will be weaker.
This compares to only 14 per cent in February.
- The RBC Investment Index for March 2006 stands
at 98.6 down from a sixteen-month high of 101.5 in February.
This cooling of the overall investment climate is also a
contributor to the overall decline in consumer confidence.
Fewer than four in ten Americans believe the next month
will be a good time to invest in the stock market - down
substantially from the 46 per cent who were confident in
February. However, the decline in confidence regarding investing
in the stock market is not pervasive. Confidence remains
relatively high among those who currently invest in the
stock market (among investors, 52 per cent feel now is a
good time to invest, while only 37 per cent feel now is
a bad time for investment).
- Opinions regarding purchases remain stable with 38 per
cent of those surveyed reporting they are more confident
in making a major purchase like a home or a car and 45 per
cent stating they are comfortable making other household
purchases.
- Confidence in job security is traditionally one of the
most robust and resilient indicators of consumer confidence.
Currently, concerns over job security do not appear pervasive
in the American public. Confidence in job security has remained
basically stable with 41 per cent of Americans reporting
they are more confident about their job security than six
months ago. As a result, the RBC Jobs Index for March
stands at 118.5 - virtually unchanged from 119.3 in February.
The entire RBC CASH Index report can be viewed at www.rbc.com/newsroom/rbc-cash-index.html.
About RBC Financial Group
Royal Bank of Canada (TSX, NYSE: RY) uses the initials RBC
as a prefix for its businesses and operating subsidiaries,
which operate under the master brand name of RBC Financial
Group. Royal Bank of Canada is Canada's largest bank as measured
by market capitalization and assets and is one of North America's
leading diversified financial services companies. In the United
States, RBC provides personal and commercial banking, insurance,
full-service brokerage and corporate and investment banking
services to about 1.5 million clients through RBC Centura,
RBC Insurance, RBC Liberty Insurance, RBC Dain Rauscher and
RBC Capital Markets. The company employs approximately 70,000
full and part-time employees who serve more than 14 million
personal, business and public sector clients through offices
in North America and some 30 countries around the world. For
more information, please visit www.rbc.com.
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Contact :
Vince Boberski, RBC Dain Rauscher, (312) 559-1654
Kevin Foster, RBC Capital Markets, (212) 428-6902
Susan Austin, The Hubbell Group, Inc. (781) 210-5020
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